THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 

LOS  ANGELES 

PROFESSOR  JOHN  ELOF  BOODIN 

MEMORIAL  PHILOSOPHY 

COLLECTION 


& 

economic 


THE  CAUSE  AND  EXTENT  OF  THE  RECENT  INDUS- 
TRIAL PROGRESS  OF  GERMANY.  By  Earl  D.  Howard. 

THE  CAUSES  OF  THE  PANIC  OF  1893.  By  William  J. 
Lauck. 

INDUSTRIAL    EDUCATION.     By  Harlow  Stafford  Person, 
Ph.D. 

FEDERAL  REGULATION  OF  RAILWAY  RATES.  By  Al- 
bert N.  Merritt,  Ph.D. 

SHIP  SUBSIDIES.  An  Economic  Study  of  the  Policy  of  Sub- 
sidizing Merchant  Marines.  By  Walter  T.  Dunmore. 

SOCIALISM:  A  CRITICAL  ANALYSIS.     By  O.  D.  Skelton. 

INDUSTRIAL  ACCIDENTS  ANDTHEIR  COMPENSATION. 
By  Gilbert  L.  Campbell,  B.  S. 

THE  STANDARD  OF  LIVING  AMONG  THE  INDUSTRIAL 
PEOPLE  OF  AMERICA.  By  Frank  H.  Streightoff. 

THE    NAVIGABLE    RHINE.     By  Edwin  J,  Clapp. 

HISTORY  AND  ORGANIZATION  OF  CRIMINAL  STATIS- 
TICS IN  THE  UNITED  STATES.  By  Louis  Newton 
Robinson. 

SOCIAL  VALUE.     By  B.  M.  Anderson,  Jr. 

HOUGHTON  MIFFLIN  COMPANY 
BOSTON  AND  NEW  YORK 


XI 
SOCIAL  VALUE 


SOCIAL  VALUE 


A  STUDY  IN  ECONOMIC  THEORY 
CRITICAL  AND  CONSTRUCTIVE 


BY 


B.  M.  ANDERSON,  JR.,  PH.D. 

Instructor  in  Political  Economy 
Columbia  University 


BOSTON  AND  NEW  YORK 
HOUGHTON  MIFFLIN  COMPANY 


1911 


COPYRIGHT,   1911,  BY  HART,  SCHAFFNER  ft  MARX 
ALL   RIGHTS   RESERVED 

Published  November  zgii 


TO  MY  FATHER 

BENJAMIN  M.  ANDERSON 

OF  COLUMBIA,  MISSOURI 

MY   FIRST  TEACHER   OF 

POLITICAL  ECONOMY 


PREFACE 

THIS  series  of  books  owes  its  existence  to  the 
generosity  of  Messrs.  Hart,  Schaffner,  and  Marx 
of  Chicago,  who  have  shown  a  special  interest  in 
directing  the  attention  of  American  youth  to 
the  study  of  economic  and  commercial  subjects, 
and  in  encouraging  the  systematic  investigation 
of  the  problems  which  vitally  affect  the  business 
world  of  to-day.  For  this  purpose  they  have  dele- 
gated to  the  undersigned  Committee  the  task  of 
selecting  topics,  making  all  announcements,  and 
awarding  prizes  annually  for  those  who  wish  to 
compete. 

In  the  year  ending  June  1, 1910,  the  following 
topics  were  assigned :  — 

1.  The  effect  of  labor  unions  on  international 

trade. 

2.  The  best  means  of  raising  the  wages  of  the 

unskilled. 

3.  A  comparison  between  the  theory  and  the 

actual   practice   of   protectionism    in    the 
United  States. 

4.  A  scheme  for  an  ideal  monetary  system  for 

the  United  States. 

5.  The  true  relation  of  the  central  government 

to  trusts. 


viii  PREFACE 

6.  How  much  of  J.  S.  Mill's  economic  system 

survives? 

7.  A  central  bank  as  a  factor  in  a  financial  crisis. 

8.  Any  other  topic  which  has  received  the  ap- 

proval of  the  Committee. 
A  first  prize  of   six  hundred  dollars,  and  a 
second  prize  of  four  hundred  dollars,  were  offered 
for  the  best  studies  presented  by  class  A,  com- 
posed chiefly  of  graduates  of  American  colleges. 
The  present  volume  was  awarded  the  second 
prize. 

PROFESSOR  J.  LAURENCE  LAUGHLIN, 

University  of  Chicago,  Chairman. 
PROFESSOR  J.  B.  CLARK, 

Columbia  University. 
PROFESSOR  HENRY  C.  ADAMS, 
University  of  Michigan. 
HORACE  WHITE,  ESQ., 
New  York  City. 
PROFESSOR  EDWIN  F.  GAY, 
Harvard  University. 


A  NOTE 

THE  following  study  is  the  outgrowth  of  investi- 
gations in  the  "Quantity  Theory"  of  money, 
carried  on  in  the  seminar  of  Professor  Jesse  E. 
Pope,  at  the  University  of  Missouri,  during  the 
term  1904-5.  That  a  satisfactory  general  theory 
of  value  must  underlie  any  adequate  treatment 
of  the  problem  of  the  value  of  money,  and  that 
there  is  little  agreement  among  monetary  theor- 
ists concerning  the  general  theory  of  value,  be- 
came very  evident  in  the  course  of  this  investiga- 
tion; and  that  the  present  writer's  conception  of 
value,  as  expressed  in  a  paper  written  at  that  time 
on  the  "Quantity  Theory,"  was  not  satisfactory, 
became  painfully  clear  after  Professor  Pope's 
kindly  but  fundamental  criticisms.  The  prob- 
lem of  value,  laid  aside  for  a  time,  forced  itself 
upon  me  in  the  course  of  my  teaching:  my  stu- 
dents seemed  to  understand  the  treatment  of 
value  in  the  text-books  used  quite  clearly,  but  I 
could  never  convince  myself  that  I  understood 
it,  and  the  conviction  grew  upon  me  that  the 
value  problem  really  remained  linsolved.  Hence 
the  present  book.  It  was  begun  in  Dean  Kinley's 
seminar,  at  the  University  of  Illinois,  in  the  term 
1909-10.  The  first  three  parts,  in  substantially 
their  present  form,  and  an  outline  sketch  of  the 
germ  idea  of  the  fourth  part,  were  submitted,  in 
May  of  1910,  in  the  Hart,  Schaffner  &  Marx 


Economic  Prize  Contest  of  that  year.  Part  iv 
was  elaborated  in  detail,  and  minor  changes 
made  in  the  first  three  parts,  during  the  year 
1910-11,  at  Columbia  University.  The  book  is 
submitted  as  a  doctor's  dissertation  to  the  Fac- 
ulty of  Political  Science  of  that  institution. 

My  obligations  to  others  in  connection  with 
this  book  are  numerous.  I  cannot  refrain  from 
thanking  my  old  teacher  Professor  Pope,  in  this 
connection.  I  owe  my  interest  in  economic 
theory,  and  the  greater  part  of  my  training  in 
economic  method,  to  the  three  years  I  spent  in 
his  seminar  at  Missouri.  I  am  also  indebted  to 
him  for  substantial  aid  in  the  critical  revision 
of  the  proofsheets.  At  the  University  of  Illinois, 
Dean  Kinley  and  Professors  E.  L.  Bogart  and 
E.  C.  Hayes  were  of  special  service  to  me,  as 
was  also  Mr.  F.  C.  Becker,  now  of  the  depart- 
ment of  philosophy  at  the  University  of  Califor- 
nia. Dean  Kinley,  in  particular,  criticized  several 
successive  drafts,  and  made  numerous  valuable 
suggestions.  My  chief  obligations  at  Columbia 
University  are  to  Professors  Seligman,  Seager, 
John  Dewey,  and  Giddings.  My  debt  to  Pro- 
fessors Seligman  and  Dewey  is,  in  part,  indi- 
cated in  the  course  of  the  book,  so  far  as  points 
of  doctrine  are  concerned.  Both  have  been  kind 
enough  to  read  and  criticize  the  provisional  draft, 
and  Professor  Seligman  has  supervised  the  revis- 
ion at  every  stage.  My  wife's  services,  in  criti- 
cism, in  bibliographical  work,  and  in  the  mechani- 
cal labors  which  writing  a  book  involves,  have 
been  indispensable. 

It  is  due  Professor  J.  B.  Clark,  since  I  discuss 


his  theories  here  at  length,  to  mention  the  fact 
that,  owing  to  his  absence  from  Columbia  Uni- 
versity during  the  year  1910-11,  I  have  been 
unable  to  talk  over  my  criticisms  with  him,  and 
so  may  have  misinterpreted  him  at  points.  Of 
course,  there  is  a  similar  danger  with  reference 
to  every  other  writer  mentioned  in  the  book,  but 
the  reader  will  not  be  likely  to  think,  in  the  case 
of  others,  that  the  interpretations  have  been 
passed  on  by  the  writers  discussed,  in  advance  of 
publication.  I  must  also  mention  here  Professor 
H.  J.  Davenport,  whose  name  occurs  frequently 
in  the  following  pages.  Chiefly  he  has  evoked 
criticism  in  this  discussion,  but  it  goes  without 
saying  that  his  Value  and  Distribution  is  a  most 
significant  work  in  the  history  of  economic  theory, 
and  my  indebtedness  to  it  will  be  manifest. 


THE  AUTHOR. 


COLUMBIA  UNIVERSITY, 
May.  1911. 


ANALYTICAL  TABLE  OF  CONTENTS 

PART  I.    INTRODUCTION 

CHAPTER  I 
PROBLEM  AND   PLAN  OF  PROCEDURE 

Social  Value  concept  recently  become  important,  chiefly  in  America, 
and  primarily  through  the  influence  of  Professor  J.  B.  Clark  — 
Value  and  "social  marginal  utility"  —  Relation  of  social- value 
theory  to  Austrian  theory:  Professor  Clark's  view;  views  of  Bb'hm- 
Bawerk,  Wieser,  and  Sax  —  Statement  of  the  author's  position: 
conceptions  of  social  utility  and  social  cost  unsatisfactory,  but 
social  value  concept  a  necessity  for  the  validation  of  economic  the- 
ory —  Plan  of  procedure:  study  of  logical  requirements  of  valid 
value  concept;  failure  of  current  theory  to  justify  such  a  concept; 
cause  of  this  failure  in  faulty  psychology,  epistemology,  and  soci- 
ology presupposed  by  current  economic  theory;  reconstruction  of 
these  presuppositions;  on  the  basis  of  the  reconstruction,  a  posi- 
tive theory  of  social  value 3 

PART  II.    CRITIQUE  OF  CURRENT  VALUE  THEORY 
CHAPTER  II 

FORMAL  AND   LOGICAL   ASPECTS   OF   THE   VALUE   CONCEPT 

Value  as  ideal,  and  value  as  market  fact  —  Value  as  absolute,  and 
value  as  relative  —  Value  as  quantity  —  Relation  between  quan- 
tity and  quality  —  Relative  conception  of  value  involves  a  vi- 
cious circle,  if  treated  as  ultimate  —  Every  "relative  value"  im- 
plies two  absolute  values  —  Ratios  must  have  quantitative  terms 
—  But  physical  quantities  cannot  serve  as  these  terms  —  Value 
and  evaluation:  confusion  of  the  two  responsible,  in  part,  for  doc- 
trine of  relativity — Value  in  current  economic  usage:  value  and 
wealth;  money  as  a  "measure  of  values  " 13 

CHAPTER  m 

VALUE  AND  MARGINAL   UTILITY 

Individualistic  method  of  Jevons  and  the  Austrians  —  Such  a 
method,  applied  to  value  problem  in  concrete  social  life,  yields, 
not  quantities  of  value,  but  rather,  particular  ratios  between  such 
quantities  —  Value  cannot  be  identified  with  marginal  utility  of  a 
good  to  a  marginal  individual,  even  though  we  assume  the  com- 
mensurability  and  homogeneity  of  human  emotions  —  Clark's 
Law  .  28 


xiv  CONTENTS 

CHAPTER  IV 
JEVONS,   PARETO  AND  BOHM-BAWERK 

When  individualistic  methods  and  assumptions  are  pushed  to  the 
extreme,  the  problem  of  a  quantitative  value  becomes  still  more 
hopeless  —  Jevons'  psychological  and  epistemological  assump- 
tions —  No  objective  value  quantity  for  Jevons  —  The  same  true 
of  Pareto  —  BShm-Bawerk,  trying  to  find  law  of  value  in  law  of 
price,  reaches  results  no  more  satisfactory  —  Austrian  analysis, 
even  with  Professor  Clark's  correction,  is  simply  an  explanation 
of  the  modus  operandi  of  determining  particular  ratios  between 
values  in  the  market  — It  tells  us  nothing  of  value  itself,  and  as- 
sumes a  whole  system  of  values  predetermined 34 

CHAPTER  V 
DEMAND   CURVES   AND   UTILITY   CURVES 

Constant  confusion  of  demand  curves  and  utility  curves  in  current 
economic  literature  has  made  necessary  much  of  the  foregoing 
criticism  —  Confusions  in  the  writings  of  Jevons,  Bohm-Bawerk, 
Wieser,  Pierson,  Patten,  Hadley,  Ely,  Schaeffle,  Flux,  Marshall, 
and  Davenport 40 


Extreme  abstractness  of  the  Austrian  theory  —  Abstraction  legiti- 
mate and  necessary,  but  must  not  be  carried  so  far  that  the  expla- 
nation phenomena  are  obliged  to  include  the  problem  phenomenon 

—  Austrians  explain  value  in  terms  of  value,  — a  vicious  circle  — 

—  Circle  explicit  in  Wieser  —  Also  explicit  in  Hobson's  attempt 

to  combine  Austrian  theory  with  cost  theory  of  English  School  .      45 

CHAPTER  VII 
PROFESSOR  CLARK'S  THEORY  OF  SOCIAL  VALUE 

All  attempts  to  explain  value  in  terms  of  the  highly  abstract  factors 
of  individual  utility  and  individual  cost,  or  any  combination  of 
them,  must  become  similarly  entangled  —  Austrians  have  shown 
this  of  English  theory  —  Professor  Clark's  value  theory,  set  forth 
in  the  Distribution  of  Wealth,  intended  to  justify  social  value  con- 
cept, really  uses  only  these  abstract  individual  factors,  combined 
in  arithmetical  sums,  and  similarly  falls  into  a  circle  —  Differ- 
ences between  Professor  Clark's  point  of  view  in  his  Philosophy 
of  Wealth  and  that  of  his  later  writings  —  The  point  of  view  of 
the  earlier  book,  supplemented  by  later  studies  in  social  psycho- 
logy, will  afford  the  basis  for  an  organic  conception  of  society,  and 
a  valid  doctrine  of  social  value  49 


CONTENTS  xv 

PART  m. 


CHAPTER  VIII 
THE  PHILOSOPHICAL  AND  PSYCHOLOGICAL  PRESUPPOSITIONS 

Connection  between  social  philosophy  and  metaphysics  and  episte- 
mology  always  close  — Three  stages  in  history  of  philosophy:  dog- 
matic, skeptical,  critical  —  Ancient  and  modern  philosophy  have 
each  gone  through  these  three  stages  —  Each  philosophic  stage 
characterized  by  distinctive  social  philosophy:  individualism  and 
sociological  monadism  go  with  skeptical  philosophy,  while  organic 
conception  of  society  goes  with  critical  stage — Economics  to-day 
based  on  skeptical  philosophy  of  Hume  —  Doctrine  of  sociologi- 
cal monadism:  Marshall,  Pareto,  Jevons,  Veblen,  Davenport  — 
Critique  of  sociological  monadism,  from  standpoint  of  episte- 
mology  and  psychology 59 

CHAPTER  IX 

THE   SOCIOLOGICAL  PRESUPPOSITIONS 

Conceptions  of  the  social  unity:  mechanical,  biological,  psychologi- 
cal —  DeGreef's  criticism  of  mechanical  and  biological  analogies 
—  Hierarchy  of  sciences:  Comte  and  Baldwin  —  Baldwin's  psy- 
chical abstractionism  —  Cooley's  psychological  conception  of  the 
nature  of  society  seems  most  useful  for  purposes  of  this  study  — 
Cooley's  view  —  Relation  between  Cooley  and  Giddings:  the  So- 
cial Mind  —  Summary  of  sociological  doctrine  —  Critique  of 
Davenport 72 

PART  IV.    A  POSITIVE  THEORY  OF  SOCIAL  VALUE 
CHAPTER  X 

VALUE  AS  GENERIC  — THE  PSYCHOLOGY  OF  VALUE. 

Economic  value  a  species,  coordinate  with  ethical,  legal,  aesthetic, 
and  other  values  —  Psychology  of  value,  as  manifested  in  indi- 
vidual experience  —  Values  as  "tertiary  qualities"  —  When  we 
reflectively  break  up  the  experience,  values  thrown  from  object 
to  subject's  emotional  life,  but  this  an  abstraction  from  concrete 
experience  —  Feeling  and  desire  in  relation  to  value:  hedonism; 
Ehrenf els  and  Davenport;  Urban  and  Meinong  —  "Presupposi- 
tions" of  value  —  Feeling  and  desire  both  phases  in  value,  but 
neither  is  the  worth-fundamental,  and  each  may  vary  in  intensity 
without  affecting  amount  of  value  —  Value  and  reality  judg- 
ment: Meinong  and  Tarde;  Urban  —  On  structural  side,  feeling, 
desire,  and  "reality  feeling"  are  all  significant  phases  in  value  — 
But  real  significance  of  value  lies  in  '^functional  aspect:  the  func- 
tion of  value  is  the  function  of  motivation  —  Essence  of  value  is 
•power  in  motivation  —  For  concrete  experience,  this  power  a 
quality  of  the  object  —  Positive  and  negative  values  —  Com- 


xvi  CONTENTS 

plementary  values  —  Rival  values:  two  cases:  qualitatively  com- 
patible, and  qualitatively  incompatible  values  —  In  first  case, 
quantitative  marginal  compromise  often  possible:  generalization 
ef  Austrian  analysis  —  So-called  "absolute  values"  ("absolute" 
here  used  as  in  history  of  ethics)  —  No  sharp  lines  between  dif- 
ferent sorts  of  values,  as  ethical,  economic,  aesthetic  —  Differ- 
ent sorts  of  values  do  not  constitute  self-complete,  separate  sys-  - 
terns  —  Generalization  of  notion  of  price  —  Suggestions  as  to 
analogues  in  the  field  of  the  social  values 93 

CHAPTER  XI 

RECAPITULATION  —  THE    SOCIAL    VALUES  —  FUNCTIONS  OF 
THE   VALUE   CONCEPT  IN  ECONOMICS 

Conclusions  reached  both  in  economic  analysis  and  in  sociological 
analysis  point  to  values  which  correspond  to  no  individual  values, 
great  social  forces  of  motivation  —  To  individual,  economic,  legal, 
and  moral  values  appear  as  external  forces,  over  which  his  control 
is  limited,  and  to  which  he  must  adapt  his  individual  behavior  — 
Economic  theory,  often  unconsciously,  has  assumed  objectively 
valid,  quantitative  value,  and  economic  theory  valid  only  on  the 
basis  of  such  a  concept:  value  the  homogeneous  element  among 
the  diversities  of  physical  forms  of  goods,  by  virtue  of  which  ra- 
tios, sums,  and  percentages  may  be  obtained  among  them,  and 
comparisons  made  —  Process  of  "imputation"  assumes  such  a 
value  concept  —  Value  used  by  economists  to  explain  motivation 
of  economic  activity  —  Such  a  value  concept  essential  for  the 
theory  of  money  —  Implied  in  the  term,  "purchasing  power"  — 
Such  a  concept  has  never  been  justified,  but  economists,  more 
concerned  about  practical  results  than  logical  consistency,  have 
found  it  essential,  and  used  it  —  Impossible  to  develop  a  social 
quantity  by  synthesis  of  abstract  individual  elements  —  Correct 
procedure  the  reverse  of  this 115 

CHAPTER  XH 
SOCIAL  VALUE:  THE  THEORIES  OF  URBAN  AND  TARDE 

Neither  Urban  nor  Tarde  primarily  concerned  with  economic  value 
—  Urban's  important  contributions  —  Insists  on  conscious  feel- 
ing as  essential  for  social  value  —  But  feeling  may  vary  hi  intens- 
ity without  affecting  the  power  in  motivation  of  the  value  — 
Feeling  significant  when  values  are  to  be  compared  —  Social 
weight  of  those  who  feel  a  value  a  highly  significant  phase  which 
Urban  ignores  —  Tarde  recognizes  this  phase,  but  errs  in  treating 
it  as  an  abstract  element,  which  obeys  the  laws  of  simple  arithme- 
tic   124 

CHAPTER  XIII 
ECONOMIC  SOCIAL  VALUE 

How  get  out  of  Austrian  circle?  —  Temporal  regressus  vs.  logical 
analysis  of  the  concrete  whole  of  the  Social  Mind  —  Even  in 


CONTENTS  xvii 

Wieser's  "natural"  community,  psychic  elements  other  than 
"marginal  utility"  significant  for  the  determination  of  economic 
values,  especially  legal  and  moral  values  concerned  with  distribu- 
tion —  Quotation  from  Mill  —  Critique  of  "pure  economic" 
theories  of  distribution  —  They  presuppose  as  a  "framework"  a 
set  of  legal  and  moral  values  which,  in  modern  times,  especially, 
are  little  more  stable  than  "pure  economic"  forces,  and  which,  in 
any  case,  are  of  same  nature  as  economic  forces,  —  fluid,  psy- 
chic forces  —  "Pure  economic"  forces,  working  in  vacua,  would 
lead  to  anarchy;  any  concrete  economic  tendency  depends  on  \ 
legal  and  moral  forces  quite  as  much  as  on  "pure  economic"  / 
forces  —  Illustrations  132 

CHAPTER  XIV 
ECONOMIC  SOCIAL  VALUE  (continued) 

Abstract  elements  of  the  Austrian  and  English  schools,  individual 
"utilities"  and  "costs,"  have  their  place  in  the  concrete  whole  of 
social  intermental  life  —  Social  causes  largely  determine  them  — 
But  this  not  enough  for  a  theory  of  social  value  —  Intensity  of  a , 
man's  feelings  or  desires  has  no  relation  whatever  to  value  in  mar- 
ket till  we  know  social  rankings  of  men  —  Conflicts  of  values 
concerned  with  these  social  rankings  —  Prices  express  results  of 
court  decisions  as  well  as  results  of  changing  individual  desires 
for  economic  goods  —  We  break  the  circle  by  turning  to  the  con- 
crete whole  of  social-mental  life  —  Economics  has  failed  to  profit 
by  example  of  other  social  sciences  here  —  No  social  science  can 
explain  its  phenomena  by  reference  to  one  or  two  abstract  factors  148 

CHAPTER  XV 
SOME  MECHANICAL  ANALOGIES 

Mechanical  analogies  of  limited  use  in  revealing  full  complexity  of 
social  control,  but  of  use  for  certain  purposes  —  Our  argument 
can  be  put,  in  part,  in  terms  of  mechanical  analogies  —  Trans- 
formations of  social  forces  —  Illustrations  —  Marginal  equilibria 
among  social  forces  —  Illustrations  —  Social  forces  of  control 
take  different  forms  under  different  conditions  —  Mechanical 
analogies  useful  enough  for  economic  price-analysis  —  Our  thesis 
involves  no  radical  revision  of  economic  methodology  —  It  is 
rather  concerned  with  interpretation  and  validation  of  economic 
methodology  156 

CHAPTER  XVI 

PROFESSOR  SELIGMAN'S  PSYCHOLOGICAL  DOCTRINE  OF  THE 
RELATIVITY  OF  VALUES 

Professor  Seligman's  contributions  to  value  theory  —  Points  of  dif- 
ference between  his  views  and  those  here  maintained  —  His  psy- 
chological doctrine  of  relativity  —  Different  from  doctrine  of 
English  School,  which  is  a  matter  of  logical  definition  —  Values 
relative  because  there  is  fixed  sum  of  values,  and  increase  in  one 


xviii  CONTENTS 

/  value  can  come  only  through  decrease  in  other  values  —  Criti-' 
cism:  psychological  diflBculties;  diminution  of  all  values  in  times 
of  panics  and  epidemics;  decrease  of  economic  values  through  in- 
crease of  religious  and  other  values  —  Element  of  truth  in  Pro- 
fessor Seligman's  doctrine  —  Relation  between  Professor  Selig- 
man's  view  and  that  of  Professor  Clark  162 

CHAPTER  XVH 
THE  THEORY  OF  VALUE  AND  THE   THEORY  OF  PRICES 

Price  and  Preis  —  Price  broadened  to  include  all  relations  between 
values,  whether  money  be  involved  or  not  —  History  of  price- 
concept  in  English  economics  —  Distinction  between  prices  and 
values  —  Generalization  of  notion  of  price  —  Measurement  of 
beliefs,  etc.,  in  terms  of  money  —  "Qualitative  analysis"  and 
"quantitative  analysis"  —  Great  bulk  of  economic  theory,  and 
virtually  all  that  is  valid  and  valuable  hi  economic  theory,  has  so 
far  been  in  theory  of  prices,  and  not  in  theory  of  value  —  Meth- 
ods of  price  analysis  —  Abstract  units  of  value  —  Price  theory 
and  practical  problems 175 

CHAPTER  XVIII 
THE  THEORY  OF  VALUE  AND  THE  THEORY  OF  PRICES  (cOTl- 

cluded) 

Great  work  of  Austrians  really  done  hi  field  of  price  theory  —  They 
have,  without  logical  right,  but  with  excellent  results,  assumed 
and  used  a  quantitative,  objective  value  concept  —  Distribution 
in  relation  to  theory  of  value  and  theory  of  prices  —  Mill's  treat- 
ment primarily  from  standpoint  of  fundamental  value  theory; 
later  theories,  as  a  rule,  chiefly  concerned  with  more  superficial, 
but  also  more  exact,  price  analysis  of  distributive  problems  — 
Theory  of  value  not  a  substitute  for  detailed  price  analysis,  but, 
rather,  a  presupposition  of  it  —  Prices  have  meanings,  which 
only  theory  of  value  can  explain 188 

CHAPTER  XIX 

THE  THEORY  OF  VALUE  AND  THE  SOCIAL  OUTLOOK  — SUM- 
MART 

Belief  that  social  optimism  and  social  pessimism  are'connected  with' 
theory  of  value  —  Views  of  Fetter,  Schumpeter,  Wieser,  and 
Davenport.  —  No  such  implications,  either  optimistic  or  pessim- 
istic, in  theory  here  maintained.  —  Theory  of  value  does  not  con- 
tarn  justification  of  existing  social  order  —  Summary  of  Tnain 
argument  of  book 194 

INDEX  OF  NAMES'.  .    201 


PART  I 
INTRODUCTION 


SOCIAL  VALUE 

CHAPTER  I 

PBOBLEM  AND  PLAN  OF  PROCEDURE 

RECENT  economic  literature  has  had  much  to 
say  about  "social  value."  The  conception,  while 
not  entirely  new,1  has  become  important  only  of 
late  years,  chiefly  through  the  influence  of  Pro- 
fessor J.  B.  Clark,  who  first  set  it  forth  in  his 
article  in  The  New  Englander  in  1881  (since 
reproduced  as  the  chapter  on  the  theory  of  value 
in  his  Philosophy  of  Wealth) .  The  conception  has 
been  found  attractive  by  many  other  American 

1  The  value  concept  of  Marx  is  not,  strictly  speaking,  a  social  value 
concept.  Cf.  Pareto,  V.,  Cours  d'Economie  Politique,  vol.  i,  p.  32.  Rod- 
bertus,  however,  has  a  doctrine  of  social  use  value,  based  on  the  organic 
conception  of  society.  "Nemlich  so:  es  gibt  nur  Eine  Art  Werth  und  das 
ist  der  Gebrauchswerth.  .  .  .  Aber  dieser  Eine  Gebrauchswerth  ist  ent- 
weder  individueller  Gebrauchswerth  oder  socialer  Gebrauchswerth.  .  .  . 
Der  zweite  ist  der  Gebrauchswerth,  den  ein  aus  vielen  individuellen 
Organismen  bestehender  socialer  Organismus  hat.  .  .  .  Damit  glaube 
ich  also  bewiesen  zu  haben,  dass  der  Tauschwerth  nur  der  historische 
Um-  und  Anhang  des  socialen  Gebrauchswerths  aus  einer  bestimmten 
Geschichtsperiode  ist.  Indem  man  also  dem  Gebrauchswerth  einen 
Tauschwerth  als  logischen  Gegensatz  gegentiber  stellt,  stellt  man  zu  einem 
logischen  Begriff  einen  historischen  Begriff  in  logischem  Gegensatz,  was 
logisch  nicht  angeht."  From  a  letter  to  Adolph  Wagner,  published  by 
Wagner  in  the  Zeitschrift  fur  die  Oesammte  Siaatsvrissenschaft,  1878,  pp. 
223-24.  Wagner  indicates  his  approval  of  this  concept,  though  he  makes 
little  use  of  it,  in  his  Grundlegung  der  politischen  Oekonomie,  Leipzig,  1892, 
pp.  329-30.  Ingram,  in  hisHistory  of  Political  Economy  (New  York,  1888), 
although  he  takes  no  account  of  social  value  theories  of  other  writers, 
suggests  one  of  his  own  —  which  is,  however,  a  vague  one,  mixing  techno- 
logical, ethical,  and  economic  categories.  See  p.  241. 


4  SOCIAL  VALUE 

writers,  however,  and  has  become  familiar  in 
many  text-books,  and  in  periodical  literature. 
Among  those  who  have  used  the  conception  may 
be  named :  Professors  Seligman,  Bullock,  Kinley, 
Merriam,  Ross,  and  C.  A.  Tuttle.1  Gabriel 
Tarde,  the  brilliant  French  sociologist,  has  inde- 
pendently developed  a  social  value  doctrine,  dif- 
ferent in  many  respects  from  that  of  the  Ameri- 
cans named,  which  we  shall  later  have  occasion 
to  consider.2 

In  its  most  definite  form,  the  theory  asserts 
that  the  value  of  an  economic  good  is  determined 
by,  and  precisely  accords  with,  the  marginal 
utility  of  the  good  to  society,  considered  as  a 
unitary  organism.  Professor  Clark,  as  is  well 
known,  makes  use  of  the  analysis  of  diminishing 
utility  in  an  individual's  consumption  of  goods 
in  much  the  same  fashion  that  Jevons  does,  but 
while  Jevons  makes  this  simply  a  step  in  the 
analysis  of  market  ratios  of  exchanges,  Professor 
Clark  treats  it  as  analogical,  representing  in 

1  Seligman,  E.  R.  A.,  Principles  of  Economics,  New  York,  1905,  espe- 
cially pp.  179-82  and  192-93.  Bullock,  C.  J.,  Introduction  to  the  Study  of 
Economics,  especially  pp.  162-64.  There  is  no  attempt  at  a  psychological 
treatment  in  this  work,  and  no  clear  statement  of  the  meaning  of  the 
concept,  social.  Kinley,  David,  Money,  New  York,  1904,  pp.  125-26. 
The  social  value  conception  runs  through  the  book.  Merriam,  L.  S.,  "The 
Theory  of  Final  Utility  in  its  Relation  to  Money  and  the  Standard  of 
Deferred  Payments,"  Annals  of  the  American  Academy,  vol.  in;  "Money 
as  a  Measure  of  Value,"  ibid.,  vol.  iv;  an  unfinished  study  in  the  same 
volume,  pp.  969-72,  described  by  Professor  J.  B.  Clark.  Ross,  E.  A.,  "The 
Standard  of  Deferred  Payments,"  ibid.,  vol.  m;  "The  Total  Utility  Stand- 
ard of  Deferred  Payments,"  ibid.,  vol.  IV.  These  articles  by  Professors 
Ross  and  Merriam  were  written  in  the  course  of  an  interesting  contro- 
versy between  the  gentlemen  named.  Tuttle,  C.  A.,  "The  Wealth  Con- 
cept," ibid.,  vol.  i;  "The  Fundamental  Economic  Principle,"  Quarterly 
Journal  of  Economics,  1901. 

1  See  chapter  xn. 


PROBLEM  AND  PLAN  OF  PROCEDURE     5 

parvo  what  society  does,  as  an  organic  whole, 
on  a  bigger  scale.1 

The  precise  relation  of  social  value  to  social 
marginal  utility  is  variously  stated  by  the  writ- 
ers named:  for  Professor  Clark,  value  is  the 
measure  of  effective,  or  marginal,  utility;2  for 
Professor  Seligman,  social  value  is  the  expression 
of  social  marginal  utility;3  for  Professors  Ross, 
Merriam,  and  Kinley,  value  is  that  social  margi- 
nal utility  itself.4  These  statements  are  more 
different  in  words  than  in  ideas,  though  some 
significance  is  to  be  attached  to  Professor  Selig- 
man's  formulation,  as  will  later  appear. 

This  conception  is  a  bold  one.  It  has,  more- 
over, never  been  adequately  developed  or  criti- 
cized. Its  friends  have  found  it  a  convenient  and 
useful  working  hypothesis,  and  Professor  Clark, 
especially,  has  built  a  great  system  upon  it,  but, 
with  the  exception  of  an  article  in  the  Yale  Review 
of  1892,6  has  made  no  serious  efforts,  either  to 
make  clear  its  full  meaning,  or  to  vindicate  it  — 
except  that,  of  course,  his  whole  system  may  be 
considered  such  a  vindication.  Professor  Selig- 
man, in  an  article  in  the  Quarterly  Journal  of 
Economics,  vol.  xv,  and  also  in  his  Principles  of 
Economics,  has  espoused  the  conception,  and  has 
shown  how,  assuming  its  truth,  a  great  many 

1  See  especially  Professor  Clark's  Essentials  of  Economic  Theory,  New 
York,  1907,  pp.  41-42. 

*  See  especially  The  Philosophy  of  Wealth,  1892  ed.,  pp.  73-74. 

1  Principles,  pp.  179-82. 

4  The  general  references  for  Ross  and  Merriam  have  been  given  supra. 
Cf.  p.  62  of  Dean  Kinley's  Money. 

6  "Ultimate  Standard  of  Value."  This  article  is  substantially  the  same 
u  chap,  xxiv  of  The  Distribution  of  Wealth,  New  York,  1899. 


6  SOCIAL  VALUE 

antagonistic  theories  may  be  harmonized;  but 
he,  also,  has  failed  to  treat  it  with  that  detail 
which  full  demonstration  requires.  In  particular, 
he  has  omitted  a  treatment  of  the  problem  of  the 
relation  between  the  value  of  a  good  for^the 
individual  and  for  society,  and  the  relation  be- 
tween individual  and  social  marginal  utility.1 
The  most  searching  investigation  of  the  theory 
has  come  from  unfriendly  critics,  among  whom 
may  be  especially  named  Professor  H.  J.  Daven- 
port, and  Professor  J.  Schumpeter  of  Vienna.2 

For  the  purposes  of  this  discussion,  Professor 
Clark  will  be  considered  as  the  representative  of 

1  In  his  discussion  of  social  value  in  the  Principles,  Professor  Selig- 
man  modifies  a  statement  made  in  his  article,  "Social  Elements  in  the 
Theory  of  Value  "  (Quarterly  Journal  of  Economies,  vol.  xv).  The  two 
discussions  are  parallel  in  part,  the  former  being  baaed  upon  the  latter. 
The  passage  quoted  is  from  the  Q.  J.  E.  article,  pp.  323-24.  The  same 
passage  is  essentially  reproduced  in  the  Principles  (first  edition,  p.  180), 
with  the  exception  of  the  passages  in  italics:  "I  not  only  measure  the 
relative  satisfaction  that  I  can  get  from  apples  or  nuts,  but  the  quantity 
of  apples  I  can  get  for  the  nuts  depends  upon  the  relative  estimate  put 
upon  them  by  the  rest  of  society.  Some  individuals  may  prize  a  commodity 
a  little  more,  some  a  little  less  ;  but  its  real  value  is  the  average  estimate,  the 
estimate  of  what  society  thinks  it  is  worth.  If  an  apple  is  worth  twice  as 
much  as  a  nut,  it  is  only  because  the  community,  after  comparing  and 
averaging  individual  preferences,"  etc.  The  conception  of  social  value  as 
an  average  of  individual  values  is  withdrawn  in  the  second  treatment,  and 
no  substitute  is  offered  for  it. 

1  Davenport,  "Seligman,  'Social  Value,'  "  Journal  of  Pol.  Econ., 
1906;  Value  and  Distribution,  Chicago,  1908.  This  last  work  reproduces, 
in  abridged  form,  the  article  on  Professor  Seligman,  in  a  footnote,  pp. 
444  et  seq.  Schumpeter,  "On  the  Concept  of  Social  Value,"  Q.  J.  E., 
Feb.,  1909;  "Die  neuere  Wirtschaftslehre  in  den  Vereinigten  Staaten," 
Jahrbuch  fiir  Gesetzgebung,  Verwaltnng  und  Volksvrirtschaft  im  Deutschen 
Reich,  1910,  pp.  913  et  seq.  In  the  last-named  article  (p.  926,  n.)  Pro- 
fessor Schumpeter  indicates  that  his  objection  to  the  social  value  concept 
relates  not  so  much  to  the  question  of  fact  as  to  the  question  of  method. 
The  English  article  in  the  Quarterly  Journal  contains  Schumpeter *s  fullest 
treatment  of  the  topic. 


PROBLEM  AND  PLAN  OF  PROCEDURE        '  7 

the  Social  Value  School,  for  the  most  part, 
though  attention  will  be  given  to  some  of  the 
other  writers  named  as  well.  It  is  worth  while, 
consequently,  to  make  clear  at  this  point  the 
relation  between  Professor  Clark  and  the  Aus- 
trian School,  with  which  he  is  sometimes  asso- 
ciated by  economic  writers.  His  extensive  use 
of  the  marginal  principle,  his  use  of  the  term, 
"utility,"  and  his  deduction  of  value  from 
utility,  seem  to  place  him  at  one  with  them.  Pro- 
fessor Clark  has  pointed  out,  however,  in  the  pre- 
face to  the  second  edition  of  his  Philosophy  of 
Wealth,  that  his  theory  is  to  be  distinguished 
from  that  of  Jevons  by  "the  analysis  of  the  part 
played  by  society  as  an  organic  whole  in  the 
valuing  processes  of  the  market."  And  the  Aus- 
trians,  for  their  part,  have  rejected  the  concep- 
tion that  value  and  social  marginal  utility  coin- 
cide, or  that  society,  as  an  organic  whole,  puts  a 
value  on  goods.  Thus,  Bb'hm-Bawerk:  — 

Man  pflegt  den  objektiven  Tauschwert  im  Gegensatz  zu 
dem  auf  individuellen  Schatzungen  beruhenden  subjek- 
tiven  Wert  haufig  auch  als  den  volkswirtschaftlichen  Wert 
der  Giiter  zu  bezeichnen.  Ich  halte  diesen  Gebrauch  fiir 
nicht  empfehlenswert.  Zwar  wenn  man  durch  ihn  nichts 
anders  hervorheben  wollte,  alsdassdiese  Gestalt  des  Wertes 
nur  in  der  Gesellschaft  und  durch  die  Gesellschaft  hervor- 
treten  konne,  dass  er  also  das  volks-  und  sozialwirtschaft- 
liche  Wertphanomen  'per  eminentiam  sei,  so  ware  dagegen 
nichts  zu  erinnern.  Gewohnlich  mischt  sich  aber  mil  jener 
Benennung  auch  die  Vorstellung,  dass  der  Tauschwert  der 
Wert  sei,  den  ein  Gut  fiir  die  Volkswirtschaft  habe.  Man 
deutet  ihn  als  ein  tiber  den  subjektiven  Urteilen  der  ein- 
zelnen  stehendes  Urteil  der  Gesellschaft,  welche  Bedeu- 
tung  ein  Gut  fiir  sie  im  ganzen  habe;  gewissermassen  als 


8  SOCIAL  VALUE 

Werturteil  einer  objektiven  hoheren   Instanz.    Dies  ist 
irrefiihrend.1 

Equally  emphatic  is  Wieser:  — 

The  ordinary  conception,  which  makes  price  the  social 
estimate  put  upon  goods,  has  to  the  superficial  judgment 
the  attraction  of  simplicity.  A  good  A  whose  market  price 
is  £100  is  not  only  ten  times  as  dear  as  B  whose  market 
price  is  £10,  but  it  is  also  absolutely  and  for  every  one  ten 
times  as  valuable.  In  our  conception  the  matter  is  much 
more  complicated.  .  .  .  Price  alone  forms  no  basis  what- 
ever for  an  estimate  of  the  economic  importance  of  the 
goods.  We  must  go  further  and  find  out  their  relation  to 
wants.  But  this  relation  to  wants  can  only  be  realised 
and  measured  individually.  .  .  .  And  the  question  how  it 
is  possible  to  unite  those  divergent  individual  valuations 
into  one  social  valuation,  is  one  that  cannot  be  answered 
quite  so  easily  as  those  imagine  who  are  rash  enough  to 
conclude  that  price  represents  the  social  estimate  of  value.2 

Sax,  likewise,  expresses  his  dissent:  — 

Da  fur  die  exacte  Forschung  die  Psyche  einer  fabelhaften 
Collectiv-Persb'nlichkeit  nicht  existirt,  so  kann  der  Aus- 
gangspunkt  unserer  Untersuchung  auch  wieder  nur  der 
Individualwerth  sein.3 

Whatever  the  worth  of  the  conception  of  social 
value,  it  is  not  the  same  as  the  Austrian  theory. 
It  is  proper  to  remark  here  that  these  strictures  of 
the  Austrian  writers  are  probably  directed,  not 
against  Professor  Clark,  but  rather  against  the 
social  use-value  concept  as  it  had  appeared  in 
Germany,  in  the  writings,  say,  of  Rodbertus,  and 

1  B6hm-Bawerk,  "Grundzflge  der  Theorie  des  wirtschaftlichen  Gliter- 
werts,"  Conrad's  Jahrbucher,  N.  F.,  Bd.  XIII.  1886,  p.  478. 

*  Natural  Value,  p.  51,  n. 

1  Sax,  Emil,  Grundlegung  der  theoretischen  Staatswirtschaft,  Vienna, 
1887,  p.  249. 


PROBLEM  AND  PLAN  OF  PROCEDURE     9 

of  Adolph  Wagner,  who  accepts  Rodbertus' 
notion.1 

It  may  be  well,  at  the  outset,  for  the  writer  to 
define  his  own  position  briefly.  We  shall  find  the 
notion  of  social  marginal  utility,  and  the  com- 
panion notion  of  social  marginal  cost  (consider- 
ing the  latter  as  a  "real  cost,"  or  pain-abstinence 
cost,  concept),  unsatisfactory  and  unilluminat- 
ing.  Social  marginal  utility,  as  a  determinant  of 
value,  cannot  be  the  marginal  utility  of  a  good 
to  some  particular  individual  who  stands  out  as 
the  marginal  individual  in  society,  nor  can  it  be 
an  average  of  individual  marginal  utilities,  nor 
a  sum  of  individual  marginal  utilities,  nor  any 
other  possible  arithmetical  combination  of  indi- 
vidual marginal  utilities,  if  our  conclusions  are 
true.  For  the  term,  social  marginal  utility,  we 
can  find  only  a  vague,  analogical  meaning,  if  any 
at  all,  unless  we  identify  it  outright  with  social 
value,  in  which  case  it  is  a  superfluous  term, 
which  itself  not  only  explains  nothing,  but 
rather  presents  complications  which  call  for 
explanation.  We  shall  find  no  use  for  the  social 
utility  concept  in  our  analysis.  On  the  other 
hand,  we  shall  find  the  conception  of  social  value 
a  necessity  for  the  validation  of  economic  analy- 
sis, and  a  conception  which  present-day  psycho- 
logical and  sociological  theory  abundantly  war- 
rant us  in  accepting. 

I  do  not  desire,  at  the  outset  of  a  compara- 
tively short  book,  to  anticipate  my  arguments 
in  detail,  but  a  statement  of  the  plan  of  procedure 

1  See  supra,  p.  3,  note  1. 


10  SOCIAL  VALUE 

may  aid  the  exposition  somewhat.  I  shall  first, 
through  an  examination  of  the  logical  necessi- 
ties of  economic  theory,  and  of  the  function  of 
the  value  concept  in  economics,  set  up  certain 
logical  and  formal  qualifications  for  an  adequate 
value  concept.  Then  I  shall  examine  the  efforts 
made  by  current  theories  of  value  to  attain  such 
a  value  concept,  by  means  of  the  elements  of 
individual  utilities,  individual  costs,  or  combina- 
tions of  the  two,  and  show  that  such  procedure 
gets  into  invincible  logical  difficulties.  We  shall 
find  the  source  of  these  difficulties  in  the  faulty 
epistemology,  psychology,  and  sociology  which 
constitute  the  avowed  or  implicit  presupposi- 
tions of  the  economic  theory  of  to-day.  Criti- 
cizing these  faulty  presuppositions,  we  shall 
endeavor  to  reconstruct  them  in  the  light  of  later 
epistemological,  psychological,  and  sociological 
doctrine,  and  then,  on  the  basis  of  the  new 
presuppositions,  we  shall  endeavor  to  develop  a 
truly  organic  doctrine  of  social  value,  and  to  link 
it  with  what  seems  valuable  —  that  is  to  say, 
the  greater  part  —  in  the  economic  theory  of 
to-day. 


PART  II 
CRITIQUE  OF  CURRENT  VALUE  THEORY 


CHAPTER  II 

FORMAL  AND  LOGICAL  ASPECTS  OF  THE  VALUE  CONCEPT 

The  study  of  wealth  is  meaningless,  unless  there  be  a  unit 
for  measuring  it.  The  questions  to  be  answered  are  quan- 
titative. .  .  .  Reciprocal  comparisons  give  no  sums.  .  .  . 
Ratios  of  exchange  alone  afford  us  no  answer  to  the  econo- 
mist's chief  inquiries.1 

THIS  quotation  from  Professor  Clark  raises  an 
issue  which  we  must  examine  in  detail.  Pro- 
fessor Clark  proceeds,  pointing  out  the  need  for 
a  homogeneous  element,  among  the  diversities 
of  the  physical  forms  of  goods,  capable  of  abso- 
lute measurement,  if  goods  are  ever  to  be  added 
together,  or  a  sum  of  wealth  obtained.  Money, 
on  the  surface  of  things,  affords  this  common 
standard,  but  "the  thought  of  men  runs  forward 
to  the  power  that  resides  in  the  coins."  This 
power  is  effective  social  utility,  the  quantitative 
measure  of  which  is  value.  Elsewhere  in  his 
writings,2  Professor  Clark  insists  on  the  concep- 
tion of  value  as  a  quantity,  an  absolute  magni- 
tude, and  he  consistently  makes  use  of  this  con- 
ception. All  of  the  exponents  of  the  social  value 
concept  named,  except  Professor  Seligman,  fol- 
low him  in  this,  and  it  may  be  considered  an 
essential  feature  of  the  theory.  Marginal  utility 

1  Clark,  J.  B.,"  Ultimate  Standard  of  Value,"  Yale  Review,  1892.  p.  5858. 
,  »  E.  g.t  The  Philosophy  of  Wealth,  chap.  v. 


14  SOCIAL  VALUE 

is  a  definite  quantity,  social  marginal  utility 
is  a  definite  quantity,  and  value,  if  conceived  as 
identical  with  social  marginal  utility,  or  as  the 
quantitative  measure  of  it  (the  difference  is 
verbal,  for  present  purposes,  at  least),  must  be 
so  considered.  A  ratio  of  exchange,  then,  is  a  ratio 
between  two  quantities  of  social  marginal  utility, 
or  social  value,  rather  than  between  two  physical 
objects,  and  price,  in  this  view,  is  a  particular 
sort  of  ratio  of  exchange,  namely,  one  where 
one  of  the  terms  of  the  ratio  is  the  social  margi- 
nal utility,  or  the  social  value,  of  the  money  unit. 

It  is  important  to  contrast  value  as  thus  con- 
ceived, in  its  formal  and  logical  aspects,  with 
other  historical  conceptions  of  value.  In  the 
classification  which  follows,  the  writer  has  by  no 
means  attempted  an  exhaustive  list.  Definitions 
of  value  are  very  numerous,  but  it  is  not  neces- 
sary to  list  them  all,  since  many  differ,  not  so 
much  in  their  logical  or  formal  aspects,  as  in  the 
theory  of  the  origin  of  value  which  the  definition 
is  made  to  include.  There  are  two  principles  of 
classification  which  will  be  used,  however,  which, 
used  in  a  cross-classification,  will  enable  us  to 
exhibit  the  contrasts  of  most  importance  for 
present  purposes. 

The  first  line  of  cleavage  is  between  the  con- 
ceptions which  treat  value  as  an  ethical  ideal, 
often  different  from  the  market  fact,  and  those 
which  accept  the  value  which  is  expressed  in 
prices  in  the  market  as  the  "real  or  true"  value 
for  economic  science.  The  mediaeval  conception 
of  the  justum  pretium  belongs  to  the  first  class, 


ASPECTS  OF  THE  VALUE  CONCEPT  15 

as  does  also  the  conception  of  President  Hadley : 
"The  price  of  an  article  or  service,  in  the  ordi- 
nary commercial  sense,  is  the  amount  of  money 
which  is  paid,  asked,  or  offered  for  it.  The  value 
of  an  article  or  service,  is  the  amount  of  money 
which  may  properly  be  paid,  asked,  or  offered 
for  it." 1  And  the  value  theory  of  Karl  Marx, 
though  differing  from  either  of  these  in  points, 
is  yet  like  them  in  this  one  respect:  value  and 
price  do  not  necessarily  agree  for  Marx.  The 
value  of  a  thing  for  him  depends  on  the  "jso- 
cially  necessary"  labor  embodied  in  it,  while 
some  things,  as  land,  command  a  price  in  the 
market,  even  though  embodying  no  labor.2  Op- 
posed to  this  group  of  theories  are,  doubtless, 
the  greater  part  of  present-day  writers,  who, 
while  differing  among  themselves  at  many  points, 
would  insist  that  value  is  ajact,  and  not  an  ideal. 
The  second  line  of  diyision  is  between  the  con- 
ceptions of  value  as  a  quantity  and  value  as  a 
ratio,  or,  to  put  the  thing  more  generally  and 
more  accurately,  between  the  value  of  a  thing  as 
a  definite  magnitude,  independent  of  exchange 
relations,  ancT  that  value  as  a  relative  thing,  not 
only  measured  by  the  process  of  exchanging,  but 

1  Economics,  p.  92.  See  also  the  article  by  President  Hadley  on 
"Value"  in  Baldwin's  Dictionary  of  Philosophy,  etc.,  and  "Misunder- 
standings about  Economic  Terms,"  Yale  Review,  vol.  rv,  pp.  156-70. 
The  same  ideas  are  expressed  in  all. 

*  Some  of  my  socialist  friends  object  to  the  interpretation  of  Marx 
given  above.  I  feel  strengthened  in  my  position  here  by  finding  the  same 
view  expressed  by  Conrad  in  his  Grundriss,  etc.,  4te  Aufl.,  Bd.  I,  pp.  17-18. 
Professor  O.  D.  Skelton's  admirable  Socialism  (Hart,  Schaffner  &  Marx 
Series,  1911)  comes  to  hand  while  the  proof  sheets  of  the  present  vol- 
ume are  being  revised.  Cf.  his  interesting  chapter  on  the  Marxian 
theory  of  value.  , 


16  SOCIAL  VALUE 

also  caused  by  it,  and  varying  with  the  value  of 
the  things  with  which  the  article  is  compared. 
Professor  Clark  and  his  followers  belong  in  the 
second  group  of  the  first  classification,  and  in  the 
first  group  of  the  second  classification.  The  social 
value  of  which  they  speak  is  a  fact,  and  not  an 
ideal  (though  Professor  Clark  has  often  been 
interpreted  as  teaching  that  the  fact  corresponds 
closely  with  an  ideal),  and  social  value  as  treated 
by  them  (noting  the  exception  of  Professor 
Seligman,  who  does  not  follow  Professor  Clark 
closely),  is  an  absolute  magnitude.1  Karl  Marx 
and  Henry  George  agree  with  them  upon  this 
latter  point.  Value  is  a  quantity,  and  not  a  mere 
relation,  for  both.2  Wieser  would  concur  here.3 
Professor  Carver,  in  a  recent  article  in  the 
Quarterly  Journal  of  Economics*  insists  on  the 
conception  of  value  as  a  quantity.  Gabriel  Tarde 
states  the  matter  illuminatingly  in  a  passage  in 
his  Psychologie  Economique:6  — 

1  Seligman,  Principles,  pp.  184-85.  See  also  Taylor,  W.  G.  L.,  "Values. 
Positive  and  Relative,"  Annals  A.  A.,  vol.  ix,  pp.  70-106.  Taylor,  who 
follows  Professor  Clark  largely,  accepts  the  conception  of  social  value  as 
a  quantity. 

1  Marx,  Capital  and  Capitalistic  Production,  London,  1896,  pp.  2-4. 
George,  Science  of  Political  Economy,  New  York,  1898,  chap.  xi. 

»  Natural  Value,  p.  53,  n. 

4  "The  Concept  of  an  Economic  Quantity,"  Q.  J.  K,  May,  1907.  Pro- 
fessor Carver  insists  on  the  quantitative  nature  of  value,  taking  as  his 
point  of  departure  the  point  made  infra,  p.  27,  with  reference  to  money 
as  a  measure  of  values.  But  it  is  not  clear  that  he  has  entirely  freed  him- 
self from  the  conception  of  relativity,  for  he  continues  to  speak  of  value 
as  "purchasing  power"  (pp.  438-39),  and  this  term  has  usually  the  rela- 
tive, rather  than  the  absolute,  significance.  Cf.  his  use  of  the  term  "pur- 
chasing power"  in  his  Distribution  of  Wealth,  1904,  pp.  51-52,  where  the 
relativity  of  value  is  insisted  on  as  a  basis  for  a  criticism  of  Professor 
Clark's  amendment  of  the  Austrian  theory. 

*  Paris,  1902,  vol.  I,  p.  63. 


ASPECTS  OF  THE  VALUE  CONCEPT  17 

Value  is  a  quality  which  we  attribute  to  things,  like 
color,  but  which,  like  color,  exists  only  in  ourselves.  .  .  . 
This  quality  is  of  that  peculiar  species  of  qualities  which 
present  numerical  degrees,  and  mount  or  descend  a  scale 
without  essentially  changing  their  nature,  and  hence  merit 
the  name  of  quantities. 

On  the  other  hand,  the  doctrine  of  relativity 
has  characterized  the  teachings  of  the  English 
School,  of  the  Austrians  (except  Wieser),  and  of 
many  of  the  more  eclectic  followers  of  each  in 
this  country.  It  will  appear  later  that  this  rela- 
tive conception  follows  naturally  from  their  in- 
dividualistic method  of  approaching  the  subject. 
The  essence  of  the  relative  conception  of  value, 
whether  defined  as  "power  in  exchange,"  or 
"ratio  of  exchange,"  or,  with  Professor  Fisher,1 
and  others,  as  a  quantity  of  goods  to  be  got  in 
exchange,  comes  out  in  the  statement,  so  common 

1  Fisher,  Irving,  The  Nature  of  Capital  and  Income,  New  York,  1906, 
pp.  13  el  seq.  Ely,  R.  T.  (and  others),  Outlines  of  Economics,  New  York, 
1908,  pp.  156-57.  Professor  Ely  uses  the  term  in  a  different  sense  on  pp. 
99-100;  and  on  the  pages  first  cited  indicates  that  value,  defined  as  a 
quantity  of  other  goods,  is  to  be  distinguished  from  subjective  value.  But 
"subjective"  (individual)  value  would  hardly  serve  as  an  equivalent  for 
the  value  described  on  pp.  99-100.  There  are,  in  fact,  four  pretty  distinct 
uses  of  the  term  value  to  be  found  in  Professor  Ely's  discussion,  inade- 
quately distinguished,  and  often  confused  in  the  treatment:  (1)  homo- 
geneous quality  among  the  diversities  of  the  physical  forms  of  wealth, 
by  virtue  of  which  a  sum  of  wealth  may  be  obtained  (99-100) ;  (2)  ratio 
of  exchange  (156);  (3)  quantity  of  goods  obtained  in  exchange  (157);  (4) 
subjective  utility  (157  and  ante);  and  a  fifth  meaning  is  indicated  for 
market  value  on  pp.  358-59,  where,  in  explaining  the  law  of  rent  for  plea- 
sure grounds  and  residence  sites,  the  "general  law  of  value"  is  declared 
to  be  that  value  measures  marginal  utility.  Cf.  the  confusions  of  utility 
and  demand  pointed  out  infra,  chapter  v.  This  loose  treatment  of  the 
value  concept,  while  doubtless  accentuated  by  the  fact  that  four  men  have 
cooperated  in  the  production  of  the  book,  is  too  much  characteristic  of 
most  of  the  text-books.  There  is  even  to-day  little  uniformity  or  agree- 
ment as  to  what  value  means. 


18  SOCIAL  VALUE 

in  the  text-books,  that,  while  there  can  be  a  gen- 
^  «ral  rise  or  fall  of  prices,  there  cannot  be  a  general 
rise  or  fall  of  values,  since  a  rise  in  the  value  of 
one  good  implies  a  corresponding  fall  in  the  value 
of  all  other  goods.  The  incompatibility  of  the  two 
opposing  conceptions  comes  out  strikingly  here : 
if  value  be  an  absolute  magnitude,  then  there  can 
be  a  general  rise  or  fall  of  values  without  disturb- 
ing excliange  ratios  at  all  — 12 :6 :  :6 :3.  All  values 
might  be  cut  in  half,  or  multiplied  by  any  factor, 
and,  provided  all  decreased  or  increased  in  the 
same  degree,  exchange  relations  would  not  change. 
Now  this  difference  is  fundamental.  Vastly 
more  than  terminology  and  definition  is  involved. 
Is  value  a  quantity  or  a  relation?  Is  value  a 
thing  which  determines  causally  exchange  rela- 
tions, or  is  value  determined  causally  by  them? 
To  the  writer,  the  former  conception  seems  a 
logical  necessity.  Value  as  merely  relative  is  a 
thing  hanging  in  the  air.  There  is  a  vicious  circle 
in  reasoning  if,  when  I  ask  you  what  the  value  of 
wheat  is,  you  refer  me  to  corn,  and  then  when  I 
ask  you  the  value  of  corn,  you  refer  me  again  to 
wheat.  And  if  you  put  in  intermediate  links, 
even  as  many  links  as  there  are  different  com- 
modities in  the  market,  the  circle  still  remains: 
the  value  of  A  is  its  power  over,  or  its  ratio  with, 
B;  the  value  of  B  its  relation  to  C;  the  value  of 
C  ...  its  relation  to  Z;  and  the  value  of  Z,  the 
last  in  the  series,  must  come  back  to  its  relation 
to  one  of  those  named  before.  This  circle  is  noted 
and  sharply  criticized  by  Wieser:1  — 

1  Natural  Value,  p.  53,  n. 


ASPECTS  OF  THE  VALUE  CONCEPT  19 

Theorists  who  have  confined  themselves  to  the  examina- 
tion of  exchange  value,  or,  what  comes  to  the  same  thing, 
of  price,  may  have  succeeded  in  discovering  certain  em- 
pirical laws  of  changes  in  amounts  of  value,  but  they  could % 
never  unfold  the  real  nature  of  value,  and  discover  its  true 
measure.  As  regards  these  questions,  so  long  as  examina- ' 
tion  was  confined  to  exchange  value,  it  was  impossible  to 
get  beyond  the  formula  that  value  lies  in  the  relation  of 
exchange;  —  that  everything  is  so  much  more  valuable  the 
more  of  other  things  it  can  be  exchanged  for.  .  .  .  Abso- 
lutely and  by  itself,  value  was  not  to  be  understood.  It  is 
significant  of  this  conception  to  state  that  one  thing  can- 
not be  an  object  of  value  in  itself;  that  a  second  must  be  ' 
present  before  the  first  can  be  valued. 

Theory  has  only  very  gradually  shaken  itself  free  from 
this  misconception,  this  circle.  Where  an  absolute  theory 
was  attempted  —  such  as  the  labour  theory,  or  that  which 
explained  value  as  usefulness  —  some  logical  leap  generally 
reconnected  it  with  the  relative  conception. 

Now  the  validity  of  this  reasoning  might  be 
admitted,  in  so  far  as  it  applies  to  "Crusoe  eco- 
nomics"—  though  Professor  Seligman,  with 
strict  consistency,  insists  that  even  there  value 
arises  from  a  comparison  in  Crusoe's  mind  of 
apples  with  nuts *  —  by  those  who  would  object 

1  Principles  of  Economics,  p.  183.  Professor  Seligman  in  the  Q.  J.  E. 
article  (supra,  p.  6,  note  i)  indicates  that  Pantaleoni  expresses  a  similar 
thought  (Pure  Economics,  London,  1898,  p.  127).  This  idea  is  elaborated 
by  Professor  Georg  Simmel,  Philosophie  des  Geldes,  Erster  Teil,  Kap.  2. 
(A  translation  of  this  chapter,  under  the  title,  "A  Chapter  in  the  Phi- 
losophy of  Value,"  appears  in  the  American  Journal  of  Sociology,  vol.  v, 
pp.  577-603.  The  translation  was  made  from  the  author's  manuscript, 
before  the  publication  of  the  book,  and  does  not  exactly  correspond  with 
the  chapter  as  published  by  Simmel.)  Simmel's  contention  is  that,  even 
for  an  isolated  economy,  value  arises  from  exchange,  and  that  exchange  is 
essential  to  it.  Every  value  is  relative  to  some  other  value.  But  to  develop 
this  conception,  "exchange"  is  distorted  into  a  variety  of  meanings.  In 
one  place,  exchange  takes  place  between  an  isolated  man  and  his  environ- 
ment. It  makes  no  difference  to  him  whether  he  is  exchanging  with  other 
men  or  with  the  order  of  nature  (Phil,  des  Geldes,  p.  34).  But  later. 


20  SOCIAL  VALUE 

to  its  application  to  value  in  society.  Value  there, 
it  would  be  insisted,  is  determined  through  ex- 
change, and  does  not  have  any  meaning  except 
as  a  ratio  between  physical  commodities.1  But 

exchange  is  declared  to  be  "a  sociological  structure  sui  generis"  (ibid.,  p. 
56).  Again,  only  in  the  vaguest  sort  of  sense  is  exchange  used  in  this 
expression,  "wo  wir  Liebe  um  Liebe  tauschen"  (ibid.,  p.  33).  Yet  all  these 
meanings  are  forced  in  to  fit  the  exigencies  of  the  argument.  The  doctrine 
of  cost  is  brought  in,  and  the  exchange  is  between  individual  cost  and 
individual  utility,  and  an  equality  between  them  is  insisted  upon,  despite 
the  well-known  phenomenon  of  "consumer's  surplus."  This  emphasis  on 
equality  in  exchanges  is  stressed  especially  on  p.  31,  and  economic  activity 
is  said  to  derive  its  peculiar  character  from  a  consideration  of  these 
equalities  in  abstraction. 

The  gist  of  Simmel's  argument  comes  out  in  the  following:  "The  ob- 
ject is  not  for  us  a  thing  of  value  so  long  as  it  is  dissolved  in  the  sub- 
jective process  as  an  immediate  stimulator  of  feelings."  Desire  must 
encounter  obstacles  before  a  value  can  appear.  "It  is  only  the  post- 
ponement of  an  object  through  obstacles,  the  anxiety  lest  the  object  escape 
[italics  mine],  the  tension  of  struggle  for  it,  which  brings  into  existence 
that  aggregate  of  desire  elements  which  may  be  designated  as  intensity  or 
passion  of  volition."  Value  is  conditioned  upon  a  "  distance  between  sub- 
ject and  object"  (A.  J.  S.,  589-90).  —  I  waive  for  the  moment  Simmel's 
apparent  insistence  upon  the  element  of  conscious  desire  as  essential  to 
value,  though  I  shall  attack  that  doctrine  in  a  later  chapter  on  the  psy- 
chology of  value.  It  is  enough  to  point  out  here  that  this  "distance  be- 
tween subject  and  object"  is  adequately  present,  that  there  is  surely 
"anxiety  lest  the  object  escape,"  if  only  the  object  be  sufficiently  limited 
in  supply,  independently  of  the  existence  of  other  objects  so  limited.  — 
Simmel  undertakes  to  meet  this  objection  by  holding  that  "scarcity, 
purely  as  such,  is  only  a  negative  quantity,  an  existence  characterized  by 
a  non-existence.  The  non-existent,  however,  cannot  be  operative"  (Phil, 
des  G.,  p.  57).  —  But  the  scarcity,  I  would  reply,  is  not,  as  he  holds,  "the 
quantitative  relation  in  which  the  object  stands  to  the  aggregate  of  its 
kind"  (A.  J,  S.,  p.  592),  but  is  rather  a  relation  between  the  object  and 
our  wants.  A  bushel  of  wheat  would  be  a  scarcity,  a  bushel  of  diamonds 
a  superabundance,  for  a  man.  There  is  a  positive  thing  here,  not  a  mere 
"non-existence,"  and  that  positive  thing  is  the  unsatisfied  want.  Cf. 
Pareto,  Cours  d'Economie  Politique,  vol.  i,  p.  34. 

See  further,  on  the  psychology  of  value,  chapter  x,  and  on  Professor 
Seligman's  theory  of  the  relativity  of  value,  chapter  xvi,  of  the  present 
volume. 

1  Laughlin,  J.  L.,  Elements  of  Political  Economy,  rev.  ed.,  copyright 
1902,  p.  18:  "Value  ...  is  a  ratio  between  two  objective  articles."  See 
also  Professor  Laughlin's  rejoinder  to  Clow's  "The  Quantity  Theory  and 


ASPECTS  OF  THE  VALUE  CONCEPT  21 

even  here,  it  seems  to  me,  the  same  reasoning 
must  hold.  We  really  do  not  find  a  ratio  between 
physical  commodities  at  all.  Four  gallons  of 
milk  exchange  for  one  dollar,  or  23.22  grains  of 
gold.  The  exchange  ratio  is  four  to  one.  But 
milk  is  in  units  of  liquid  measure;  gold  in  incom- 
mensurable units  of  Troy  weight.  The  ratio,  4 :1, 
is  not  on  the  basis  of  any  physical  commensur- 
ability.  If  any  physical  basis  of  comparison  be 
taken,  whether  weight,  or  bulk,  or  length,  or 
more  subtle  and  less  easily  measurable  physical 
qualities,  the  ratio  would  be  found  very  different. 
But  4 :1  is  the  market  ratio.  Now  a  quantitative 
ratio  is  between  commensurable  quantities.  Gold 
and  milk  must  be,  then,  commensurable  quanti- 
ties, i.e.  must  have  a  common  quality,  present 
in  each  in  definite  quantitative  degree,  before 
comparison  is  possible,  or  a  ratio  can  emerge. 
This  quality  is  value.  The  difficulty,  from  the 
standpoint  of  logic,  is  only  covered  up,  and  not 
avoided,  if  we  say  with  Professor  Davenport,1 
"Value  is  a  ratio  of  exchange  between  two  goods, 
quantitatively  specified."  [Italics  mine.]  For  the 
quantitative  specification  depends  on  the  ex- 
tent to  which  the  homogeneous  quality  is  present 
in  each  of  the  goods,  or,  if  we  assume  that  the 
quantitative  specification  is  made  before  the 
question  of  exchange  ratio  is  raised,  then  the  ex- 
change ratio  will  vary  with  the  extent  to  which 
the  common  quality  is  present  in  each  of  the 

its  Critics,"  Journal  of  P.  E.,  1902,  where  Professor  Laughlin  insists  that 
exchange  value  is  "something  physical."  Professor  Davenport,  Value  and 
Distribution,  Chicago,  1908,  p.  569,  defines  value  similarly. 
t    l  Value  and  Distribution,  p.  569. 


22  SOCIAL  VALUE 

goods.  We  can  have  no  quantitative  ratios  be- 
tween unlike  things.  And  yet,  we  must  have 
terms  for  our  ratios.  The  situation  here  is  not 
unlike  the  situation  that  arises  when  we  compare 
two  weights.  We  have  np  unit  of  weight  in  the 
abstract.  Weight  never  appears  as  an  isolated 
quality,  but  always  along  with  other  qualities, 
as  extension,  color,  and  the  like.  And  when  we 
compare  weights,  we  really  compare  two  heavy 
objects,  and  make  our  weight  ratio  between  the 
object  to  be  weighed  and  the  physical  standard 
of  weight.  Nor  does  value  ever  appear  as  an 
isolated  quality.  And  we  have  no  unit  of  ab- 
stract value  which  we  can  apply  abstractly  in  a 
measurement.  Instead,  we  choose  some  valu- 
able object,  as  23.22  grains  of  gold,  and  make 
our  ratio  between  the  given  quantity  of  gold  and 
the  object  whose  value  we  wish  to  measure.  But 
we  must  not  forget  that  this  is  merely  a  symbol, 
a  convenient  mode  of  expression,  and  that  the 
fact  expressed  is  something  different  —  that  the 
real  terms  of  our  ratios  are  so  many  units  of 
abstract  weight,  or  of  abstract  value,  as  the  case 
may  be.  Otherwise  conceived,  the  ratio  itself  is 
meaningless:  it  has  no  terms.  We  have  four  to 
one  up  in  the  air,  not  four  units  of  something  to 
one  unit  of  something.  The  abstract  ratio  is  a 
,  thing  for  pure  mathematics,  and  not  a  thing  for 
economics.  An  economic  ratio  must  have  "eco- 
nomic quantities"  as  terms.1 

1  Professor  Davenport,  caught  between  two  apparently  invincible 
logical  difficulties,  accepts  this  situation  frankly,  as,  seemingly,  the  only 
thing  possible.  See  Value  and  Distribution,  p.  184,  n.  The  ratio  has  no 
terms  for  him. 


ASPECTS  OF  THE  VALUE  CONCEPT  23 

The  difficulty  with  the  doctrine  we  are  main- 
taining arises  from  the  difficulty  of  isolating,  jand 
defining  this  quality  of  value.  It  is  not  a  quality 
"inherent"  in  the  good  (whatever  "inherent" 
may  mean).  It  does  not  arise  from  the  simple 
relation  between  our  senses  and  the  object,  or 
even  from  an  intellectual  elaboration  thereof. 
It  rather  grows  out  of  the  relation  between  our 
emotional-volitional  life  and  the  object,  and  the 
definition  of  this  relation,  and  the  determination 
of  the  quality,  have  been  so  difficult,  that  some 
writers,  as  Professor  Davenport,1  have  explicitly 
given  it  up  as  a  hopeless  task,  and  have  deter- 
mined to  content  themselves  with  the  surface 
facts  of  relativity.  But  there  is  no  logical  resting 
place  in  those  surface  facts.  Relativity  implies 
things  related,  ratios  must  have  quantitative  , 
terms,  additions  require  homogeneous  quantities 
to  make  up  a  sum. 

Some  further  distinctions  are  necessary.  When 
we  say  "absolute  magnitude,"  we  do  not  mean  a 
magnitude  which  stands  out  of  all  relations  to  * 
other  facts  in  the  universe.  There  is  no  intention 
of  setting  up  a  metaphysical  absolute  here.  The 
terms  "positive"  and  "relative"  (suggested  by 
Professor  Taylor)  2  might  serve  our  purpose  bet- 
ter, except  for  the  fact  that  we  wish  to  reserve  the 
term  "positive  value"  to  contrast  with  "nega- 
tive value"  at  a  later  stage  of  our  discussion. 
Our  objection  to  the  relative  conception  of  value N 
really  gives   our  value  more,  rather  than  less 

1  Value'and  Distribution,  pp.  330-31. 

a  "  Values,  Positive  and  Relative."  Annals,  vol.  rx. 


24  SOCIAL  VALUE 

relations.  Instead  of  allowing  its  relation  to  one 
particular  thing,  namely,  some  other  good  with 
which  it  happens  to  be  compared,  to  determine  its 
amount,  we  insist  that  that  relation  is  so  much  a 
minor  matter  that  it  can  generally  be  ignored, 
and  that  the  significant  relations — a  very  numer- 
ous set  of  relations  indeed,  as  we  shall  later  see ! 
—  are  of  another  sort.  The  contention  is  that 
value  is  absolute  only  in  this  sense :  its  amount  is 

''not  determined  by  the  particular  exchange  ratio 
in  which  it  happens  to  be  put,  and  is  not  changed 

v  eo  ipso  every  time  a  new  comparison  is  made. 
Further,  it  is  in  the  process  of  exchange,  and  by 
the  method  of  comparison,  that  the  value  of  goods 
becomes  quantitatively  known,  as  a  rule.  That 
is  to  say,  we  find  out  precisely  how  much  value 
a  good  has  by  comparing  it  in  exchange  with 
some  other  good.  In  this  respect,  value  is  again 
like  other  qualities.  We  measure  lengths,  weights, 
cubic  contents  of  objects,  all  by  comparison,  di- 
rect or  indirect,  with  other  objects.  But  the 
amount  of  water  in  a  vessel  is  not  changed  when 
we  put  it  into  a  measure,  and  determine  how 
many  gallons  of  it  there  are.  Nor  is  the  amount 
of  value  in  a  good  causally  determined  by  the 
process  of  exchange.1  We  must  distinguish  be- 
tween two  confused  meanings  of  the  word  "de- 
termine." It  may  mean  "to.  cause,"  and  it  may 
mean  "to  find  out"  or  "to  measure."  We  must 

1  It  is,  of  course,  recognized  that  exchange  modifies  value  in  so  far  as 
exchange  is  a  productive  process.  But  the  essential  thing  here  is  the 
transfer  aspect  of  exchange,  which  would  hold  even  in  a  communistic 
society  where  value  relations  might  be  found  out  by  some  process  other 
than  exchange.  ,  • 


ASPECTS  OF  THE  VALUE  CONCEPT  25 

distinguish,  in  Kantian  phrase,  between  the 
"ratio  essendi"  and  the  "ratio  cognoscendi." 
Value  and  evaluation  are  two  distinct  things. 
Vajue,  to  anticipate  a  later  part  of  the  study, 
is  primary,  and  grows  out  of  the  action  of  the 
volitional-emotional  side  of  human-social  life; 
evaluation  is  secondary,  and  is  the  intellectual 
process  devoted,  not  to  giving  value,  but  to 
finding  out  how  much  value  there  is  in  a  good. 
This  distinction  between  the  existence  of  a  quan- 
tity, and  our  precise  knowledge  of  its  amount, 
is  brought  out  by  several  writers,  among  them, 
General  F.  A.  Walker,1  and  the  keen  mathemati- 
cal economists,  Pareto  2  and  Edgeworth.3 

There  are  two  further  arguments  for  the  pro- 
priety of  this  conception,  considered  primarily  as  a 
question  of  terminology,  to  be  drawn  from  usage 
in  the  treatment  of  other  terms.  The  first  is 
drawn  from  a  consideration  of  the  function  of  the 
value  concept  in  economic  science,4  and  of  its 
relation  to  the  concept  of  wealth.  "The  notion 
of  value  is  to  our  science  what  that  of  energy  is 
to  mechanics,"  says  Jevons.5  It  is  clear  that  a 
mere  abstract  ratio,  which  Jevons  two  pages 
later  declares  value  to  be,  cannot  serve  such  a 
purpose.  Abstract  ratios  are  subject-matter  for 
mathematics,  not  for  economics.  "Wealth  and 

1  Political  Economy,  New  York,  1888,  p.  84. 

2  Cours  d' Economic  Politique,  vol.  i,  pp.  8-9. 

1  Edgeworth,  F.  Y.,  Mathematical  Psychics,  London,  1881,  chapter 
on  "  Unnumerical  Mathematics,"  pp.  83  et  seq. 

4  A  fuller  discussion  of  the  functions  of  the  value  concept  is  given  in 
chapter  xi  where  this  argument  is  materially  strengthened.  The  points 
here  made,  however,  seem  adequate. 

6  Jevons,  Principles  of  Economics,  1905  (posthumous),  p.  50. 


26  SOCIAL  VALUE 

value  differ  as  substance  and  attribute."  (Senior, 
quoted  with  approval  by  F.  A.  Walker.1)  With 
this  view,  Marx 2  would  concur.  "Wealth  is  that 
which  has_jfalue,"  Professor  Laughlin  states.3 
Clearly  a  qualitative  attribute,  and  not  a  ratio, 
must  be  indicated  here,  even  though  Professor 
Laughlin  elsewhere  in  the  book  defines  value  as 
a  "ratio  between  two  objective  articles."4  And 
if  we  take  a  definition  like  that  of  Professor  Selig- 
man,  who  defines  wealth  in  terms  which  entirely 
ignore  the  ideas  of  comparison  and  exchange 
as  consisting  of  those  things  which  are  (1)  cap- 
able of  satisfying  desire,  (2)  external  to  man,  and 
(3)  limited  in  supply,5  we  find  no  basis  for  in- 
sisting on  relativity,  exchange  and  'comparison, 
as  essential  to  the  idea  of  value,  which  is  the 
essential  and  distinguishing  characteristic  of 
wealth.  The  science  loses  in  coherency  from  this 
diversity  of  definition.  The  second  argument 
is  similar.  Current  economic  usage  speaks  of 
money  as  a  "measure"  of  values.  Professor 
Seligman  uses  the  expression  in  the  chapter  on 
money  in  the  book  referred  to.  But  the  point 
made  by  General  Walker  against  this  expression, 
when  value  is  defined  as  a  ratio,  is  absolutely 
valid.  He  says :  — 

1  Walker,  op.  cit.,  p.  5. 

2  Marx,  op.  cit.,  vol.  i,  chap.  I. 

3  Laughlin,  Elements,  p.  77.   Cf.  also,  Ely,  op.  cit.,  99-100. 

*  Ibid.,  p.  18.  It  is  interesting  to  note  that  Professor  Irving  Fisher  so 
defines  wealth  and  value  as  to  divorce  the  two  concepts.  Wealth  includes 
free  human  beings,  who  cannot  be  exchanged,  while  the  idea  of  value  is 
derived  from  that  of  price,  which,  in  turn,  comes  from  the  ideas  of 
exchange  and  transfer.  (Nature  of  Capital  and  Income,  chap,  i.) 

6  Principles,  pp.  8-11. 


ASPECTS  OF  THE  VALUE  CONCEPT  27 

I  apprehend  that  this  notion  of  money  serving  as  a  com- 
mon measure  of  value  is  wholly  fanciful;  indeed,  the  very 
phrase  seems  to  represent  a  misconception.  Value  is  a 
relation.  Relations  may  be  expressed,  but  not  measured. 
You  cannot  measure  the  relation  of  a  mile  to  a  furlong;  you 
express  it  as  8: 1.1 

Only  on  the  basis  of  a  definition  of  value  as  a 
quantity  is  it  proper  to  speak  of  a  "measure  of 
values."  2 

I  conclude  that  the  value  of  a  thing  is  a  guan- 
tity,  and  not  a  ratio.  It  is^  a  definite  magnitude, 
and  not  a  mere  relation.  What  sort  of  a  quan- 
tity remains  to  be  seen. 

1  Money,  p.  288. 

1  Cf.  Kinley,  op.  cit.,  Merriam,  loc.  cit.,  and  Carver,  "The  Concept  of 
an  Economic  Quantity,"  loc.  cit.  Cf.  also,  Laughlin,  Money,  1903,  pp.  14- 
16;  and  Davenport,  Value  and  Distribution,  p.  181,  n. 


CHAPTER  III 

VALUE  AND   MARGINAL   UTILITY 

THE  method  of  Jevons  and  the  Austrians,  and, 
for  that  matter,  of  the  great  majority  of  value 
theorists,  including  even  the  social  value  school, 
in  seeking  the  determinants  of  value,  is  to  start 
with  individual  "utilities"  or  psychic  "costs" 
directly  connected  with  the  consumption  or  pro- 
duction of  goods.  Such  a  study,  if  confined  to  an 
isolated  individual  economy,  or  if  confined  to  an 
ideal  communistic  economy,  like  that  for  which 
Wieser  works  out  his  laws  of  "natural  value," 
seems  to  yield  us  quantities  of  "utility,"  which 
may  properly  be  called  values,  or  quantities  of 
sacrifice  which  may  be  properly  treated  as  ex- 
actly measuring  values.1  But  when  applied  to 
a  competitive  society,  or  to  any  society  where 
there  are  inequalities  among  men  in  their  power 
to  attain  the  gratification  of  their  wants,  it 
yields  us,  not  quantities  of  value,  but  only  par- 
ticular ratios  between  such  quantities,  or  prices. 
An  examination  of  the  Austrian  procedure  will 
make  this  clear. 

If  the  Austrian  analysis  be  taken  as  meaning 
anything  more  than  a  method  of  determining  sur- 
face ratios  of  exchange,  difficulties  at  once  arise. 

1  This  statement  must  be  qualified,  as  subsequently  appears.  Even 
in  Wieser's  "natural"  community,  there  are  psychic  factors  in  value  other 
than  mere  utility.  See  chap,  xm,  infra. 


VALUE  AND  MARGINAL  UTILITY  29 

What  quantitative  relation  is  there  between  the 
satisfaction  which  an  individual  man  gets  from  a 
good  and  the  value  of  that  good?  What  quantita- 
tive relation  does  the  sacrifice,  in  terms  of  dis- 
satisfactions endured  and  satisfactions  foregone, 
of  the  individual  producer  bear  to  the  value  of 
his  product?  Now  in  thus  positing  the  problem, 
I  wish  to  distinguish  it  clearly  from  another  prob- 
lem, namely:  what  is  the  quantitative  relation 
between  psychic  satisfaction,  subjective  individ- 
ual value,  and  psychic  cost,  connected  with  the 
commodity,  in  the  mind  of  some  hypothetical 
"normal"  man,  and  market  value  in  a  hypo- 
thetical market,  where  only  "normal"  men  are 
found,  and  where  there  is  an  equality  of  wealth 
among  these  men  ?  The  problem  is  a  concrete  one : 
how  are  the  actual  desires  and  aversions  of  living 
men  and  women,  no  one  of  them  "normal"  per- 
haps, living  in  a  world  where  inequalities  of 
wealth  are  everywhere  manifest,  quantitatively 
related  to  value  in  the  market? 

Let  us  consider  the  inadequacy  of  the  old  Aus- 
trian analysis  for  this  quantitative  determina- 
tion. I  assume,  without  trying  to  prove  here,  the 
homogeneity  and  commensurability  of  human 
desires  and  aversions.  (The  Austrians,  be  it 
noted,  do  not  explicitly  postulate  this,  and  Jev- 
ons,  as  will  later  be  noted,  rejects  it,  but  it  is 
necessary  for  Wieser's  argument,  and  Bb'hm- 
Bawerk  implies  it  clearly  enough  in  places.1) 

1  For  further  discussion  of  this  doctrine,  see  chapters  iv  and  vin  of 
this  book.  Bb'hm-Bawerk,  Positive  Theory,  p.  149,  n.,  says:  "One  gives 
donations,  charities,  and  the  like,  when  the  importance  of  such,  measured 
by  their  marginal  utility,  is  very  much  higher  as  regards  the  well-being 


30  SOCIAL  VALUE 

This  does  not  mean  that  any  two  men  have, 
necessarily,  the  same  desire  for  any  particular 
good,  or  the  same  aversion  from  any  particular 
piece  of  work,  but  simply  that  the  desires  and 
aversions  of  one  man  are  comparable  with  those 
of  another,  and  may  be  fractions  or  multiples  of 
them,  even  though  not  exactly  equal.  My  object 
in  this  assumption  is  to  justify  the  use  of  the  con- 
cept  of  units  of  desires  and  aversions,  which  are 
not  the  desires  and  aversions  of  a  hypothetical 
"normal"  man,  but  are  some  particular  concrete 
desire  and  some  particular  concrete  aversion  of 
any  man  you  choose  to  take.  Now  let  us  assume 
the  market  as  treated  in  the  usual  Austrian  analy- 
sis (somewhat  simplified) :  five  men  have  horses 
to  sell,  and  five  buyers  appear  in  the  market 
also. 

A       B       C       D       E 

Sellers  will  take:  $20    $30    $40    $50    $60 

Buyers  will  give:          $60    $50    $40    $30     $20 

of  the  receiver  than  as  regards  that  of  the  giver,  and  almost  never  when 
the  converse  is  the  case."  The  assumption  that  emotional  states  in  dif- 
ferent minds  can  be  compared  is  very  clear  in  this  passage.  Cf.  Veblen, 
Thorstein,  "Professor  Clark's  Economics,"  Q.  J.  E.,  Feb.,  1908,  p.  170,  n.: 
"Among  modern  economic  hedonists,  including  Mr.  Clark,  there  stands 
over  from  the  better  days  of  the  order  of  nature  a  presumption,  disavowed, 
but  often  decisive,  that  the  sensational  response  to  the  like  mechanical 
impact  of  the  stimulating  body  is  the  same  in  different  individuals.  But, 
while  this  presumption  stands  ever  in  the  background,  and  helps  to  many 
important  conclusions,  .  .  .  few  modern  hedonists  would  question  the 
statement  in  the  text"  [i.e.,  that  comparison  of  emotional  intensity  in  one 
man's  mind  with  emotional  intensity  in  another  man's  mind  is  impossible]. 
In  the  light  of  the  psychological  doctrine  which  I  shall  maintain  in  the 
chapter  on  the  psychology  of  value,  this  whole  question  will  seem  beside 
the  point,  considered  as  a  psychological  question.  But  my  interest  here 
is  in  making  clear  the  psychological  implications  of  the  Austrian  theory, 
as  I  wish  for  the  present  to  consider  their  theory  on  their  own  ground. 


VALUE  AND  MARGINAL  UTILITY  31 

Price  is  then  fixed  at  forty  dollars.  Now  if  all 
these  men  were  "normal"  men,  and  if  all  had 
equal  wealth,  we  could  say  here,  marginal  util- 
ity =  value.  But  such  is  not  the  case  in  real  life. 
Our  marginal  buyer  and  marginal  seller  may  be 
as  different  as  you  please.  Let  us  assume  that 
the  marginal  buyer  is  a  very  rich  man:  forty 
dollars  is  to  him  a  bagatelle:  surrendering  it 
means  one  unit  of  cost  to  him:  he  has,  further, 
many  horses:  he  has  no  special  use  in  mind  for 
the  horse  he  is  on  the  margin  of  buying:  it  has  one 
unit  of  utility  to  him.  The  marginal  seller,  we 
will  assume,  is  a  poor  country  boy:  the  horse  is 
one  he  has  raised  himself :  he  has  a  personal  affec- 
tion for  it,  and  it  is  immensely  useful  to  him:  it 
has  two  hundred  units  of  utility  to  him,  and  to 
give  it  up  means  two  hundred  units  of  sacrifice: 
but  he  needs  the  forty  dollars  pressingly:  it  has 
two  hundred  units  of  utility  to  him.  Is  marginal 
utility  equal  to  value  here?  If  so,  marginal  util- 
ity to  whom?  But  this  does  not  exhaust  the 
difficulties  of  the  analysis  —  if  the  analysis  be 
designed  to  show  anything  except  what  a  par- 
ticular 'price  is,  and  the  utility  theorists,  when 
very  careful,  do  not  always  claim  to  do  more 
than  that.1  But  price  is  not  value. 

We  take  up  now,  as  an  additional  point  designed 
to  show  that  marginal  utility  to  an  individual  is 
not  the  same  as  value,  Professor  Clark's  clean- 
cut  analysis  amending  the  Austrian  theory 

1  Bohm-Bawerk  and  Wieser  are  certainly  seeking  an  objective  value, 
but  Jevons  and  Pareto  are  concerned  simply  with  the  ratio.  See  Wieser, 
Natural  Vol.,  p.  53,  n.  Jevons,  Pareto,  and  Bohm-Bawerk  are  discussed, 
with  reference  to  this  point,  in  chap.  iv. 


32  SOCIAL  VALUE 

which  we  shall  call  "Clark's  Law."1  A  detailed 
statement  of  this  law  is  not  necessary  here,  but 
its  main  meaning  may  be  outlined,  and  its  demon- 
stration left  to  Professor  Clark  himself.  Any 
/  good,  except  the  poorest  and  simplest,  is  a  com- 
plex, giving  several  distinct  services.  Thus,  an 
automobile  gives  the  service  of  transportation  (a 
cart  would  do  that) ;  of  comfort  (a  spring-buggy, 
with  top,  would  do  that) ;  of  elegance  and  social 
distinction  (a  carriage  would  do  that);  of  speed 
and  exhilaration  (only  an  automobile  can  do  this 
last,  and  the  others  as  well).  Now  each  of  these 
services  Professor  Clark  considers  as  a  distinct 
economic  good,  and  he  constructs  a  demand 
curve  for  each  of  them .  The  service  of  transporta- 
tion would  be  worth  $5000  to  the  marginal  buyer 
of  automobiles,  if  he  could  not  get  it  for  less,  but 
then,  he  is  not  the  marginal  user  of  carts,  and  he 
gets  the  cart  service  for  what  the  marginal  buyer 
of  it  pays,  say  $10.  The  comfort  element  would 
be  worth  $3000  to  him,  but  he  is  not  the  marginal 
buyer  there,  and  he  gets  it  for  what  the  margi- 
nal buyer  of  buggies  pays  for  a  buggy,  less  the 
$10  for  the  mere  transportation-service  of  the 
buggy,  say  $100  less  $10,  or  $90.  For  the  service 
of  elegance  and  social  distinction,  he  would  pay 
$4000,  but  then  he  does  not  have  to  do  so,  for  he 
is  not  the  marginal  buyer  of  carriages,  and  he  gets 
this  additional  service  for  $800,  less  the  price  of 
the  preceding  two  services,  or  less  $100.  For  the 

1  This  law  is  first  set  forth  by  Professor  Clark  in  an  article  in  the  Q.  J. 
E.,  vol.  viii,  "A  Universal  Law  of  Economic  Variation."  See,  also,  The 
Distribution  of  Wealth,  pp.  210-45.  A  brief  exposition  of  the  doctrine  is 
found  in  Seligman,  Principles,  1905,  pp.  185-88. 


VALUE  AND  MARGINAL  UTILITY  33 

additional  service  of  speed  and  exhilaration  he  is 
the  marginal  demander,  and  his  margin  fixes  the 
price,  say  $2000,  for  that  service.  Now  his  auto- 
mobile —  and  he  is  the  marginal  buyer,  and  he 
buys  only  one  —  gives  him  satisfaction  far  in 
excess  of  that  measured  by  the  price  he  pays  for 
it.  The  automobile,  economically  considered,  is 
several  distinct  services  bundled  together,  worth 
to  him  $5000  plus  $3000  plus  $4000  plus  $2000. 
But  he  pays  for  the  automobile  only  $2800,  or 
less  than  he  would  have  paid  even  for  the  first 
service.  Now  by  the  Austrian  definition  the  price 
of  anything  is  determined  by  its  utility  to  the 
marginal  user.  And  marginal  utility  is  the  total 
utility  of  the  marginal  unit  consumed.  The  total 
utility  of  this  marginal  automobile,  to  this  mar- 
ginal user,  would  balance  $14,000  in  his  mind, 
and  this,  by  the  Austrian  analysis,  ought  to  be 
the  price.  But  the  price  is  $2800.  Marginal  util- 
ity determines  price?  Marginal  utility  to  whom? 
Not  to  the  marginal  buyer!  To  whom,  then? 
Professor  Clark  says,  to  society,  without  further 
defining  what  he  means  by  that,  except  in  gen- 
eral terms  of  social  organism,  etc.  But  it  seems 
to  me  clear  that,  except  on  the  basis  of  some  such 
conception,  we  shall  have  to  give  up  the  idea  that 
marginal  utility  determines  price,  and  say  rather 
that  price  is  something  with  which  marginal  util- 
ity has  something  to  do!  And  the  quantitative 
relation  between  the  feeling  of  any  individual 
and  valtie  has  become  very  uncertain  indeed. 


CHAPTER  IV 

JEVONS,   PARETO  AND   BOHM-BAWERK 

IN  the  foregoing  analysis,  the  assumption  of  the 
homogeneity  and  communicability  of  human 
wants  was  made.  Only  on  this  assumption  could 
value  as  a  quantity  of  utility  appear  even  in 
Wieser's  "natural"  community.  How  hopeless 
the  case  becomes  when  individualistic  methods 
and  assumptions  are  pushed  to  the  extreme,  will 
appear  from  a  consideration  of  Jevons  and 
Pareto,  both  of  whom  insist  on  the  entirely  sub- 
jective and  incommunicable  nature  of  human 
wants.  Thus,  Jevons : 1  — 

I  see  no  means  by  which  such  a  comparison  [between  the 
motives  of  one  man  and  those  of  another]  can  be  accom- 
plished. The  susceptibility  of  one  mind  may,  for  what  we 
know,  be  a  thousand  times  greater  than  that  of  another. 
But,  provided  that  the  susceptibility  was  different  in  a  like 
ratio  in  all  directions,  we  should  never  be  able  to  discover 
the  difference.  Every  mind  is  thus  inscrutable  to  every 
other  mind,  and  no  common  denominator  of  feelings  seems 
to  be  possible.  .  .  .  But  the  motive  in  one  mind  is  weighed 
only  against  other  motives  in  the  same  mind,  never  against 
the  motives  in  other  minds.  Each  person  is  to  other  per- 
sons a  portion  of  the  outside  world  —  the  non-ego  as  the 
metaphysicians  call  it.  Thus  the  motives  in  the  mind  of  A 
may  give  rise  to  phenomena  which  may  be  represented  by 
motives  in  the  mind  of  B;  but  between  A  and  B  there  is  a 
gulf.  Hence  the  weighing  of  motives  must  always  be  con- 
fined to  the  bosom  of  the  individual. 

1  Theory  of  Political  Economy,  3d  edition,  p.  14. 


JEVONS,  PARETO  AND  BOHM-BAWERK        35 

This  question  as  to  the  homogeneity  and  com- 
mtmicability  of  emotional  states  in  different 
men  is  one  fundamental  to  any  value  theory 
which  starts  with  individual  feelings  or  desires 
as  elements  —  and,  indeed,  from  a  somewhat 
different  viewpoint,  is  fundamental  to  all  value 
theory.  Value,  as  a  concrete  quantity  of  desire 
or  feeling,  embodied  in  a  given  good  at  a  given 
time,  regardless  of  who  is  purchaser  and  who  is 
seller,  can  exist  only  if  feelings  and  desires  are 
homogeneous  and  can  interact  —  even  in  Wies- 
er's  ideal  society,  where  the  complication  of  dif- 
ferences in  wealth  does  not  obtain.  And  value 
must  have  some  very  different  meaning  unless 
this  assumption  be  held.  In  illustration  of  this, 
I  wish  to  quote  further  from  Jevons.  Jevons  finds 
for  value1  three  distinct  meanings,  for  each  of 
which  he  employs  both  a  "popular"  and  a 
"scientific"  name:  (1)  value  in  use  ("popular" 
name)  =  total  utility  ("scientific"  name);  (2)  es- 
teem, or  urgency  of  desire  ("popular"  name) 
=  final  degree  of  utility  ("scientific"  name); 
(3)  purchasing  power  ("popular"  name)  = 
ratio  of  exchange  ("scientific"  name).  Now  the 
first  two  of  these  are  purely  subjective,  individual 
facts,  varying  as  to  their  quantities  for  each  in- 
dividual. The  only  one  that  can  have  social 
meaning  is  the  third,  and  that,  as  Jevons  explic- 
itly states,  is  a  numerical  ratio,  an  abstract  num- 
ber.2 This  is  brought  out  very  clearly  when  he 
discusses  the  question  of  the  concrete  dimensions 
of  these  three  quantities.  Total  utility  has  dimen- 

>  Op.  cit.,  pp.  76-84.  *  Ibid.,  p.  83. 


36  SOCIAL  VALUE 

sions,  and  so  has  final  utility,  but  ratio  of  ex- 
change, which  he  considers  the  precise  scien- 
tific equivalent  for  the  popular  term,  purchasing 
power,  has  no  dimension  at  all.  Its  dimension 
is  zero.  Finding  these  ambiguities  in  the  word 
value,  Jevons  proposes  to  abandon  it  altogether, 
and  to  use  instead  either  of  the  three  expressions 
discussed,  depending  on  which  sense  of  the  word 
value  is  intended.1  He  can  find  no  definite  mean- 
ing for  value  as  an  unqualified  term.  Now  in  this 
I  believe  he  is  correct.  Economic  value  is  not 
total  utility  to  an  individual,  nor  marginal  utility 
to  an  individual,  nor  is  it  a  mere  ratio  of  ex- 
change. If  no  other  meaning  of  the  term  can 
be  found  —  and  no  other  meaning  can  be  found 
on  Jevons's  psychological  assumptions  —  then 
the  term  should  be  abandoned  altogether. 

Pareto's  position2  is  essentially  similar. 
"  Ophelimity "  (which  he  uses  in  place  of  the 
more  ambiguous  "utility"  to  mean  what  Jevons 
means  by  the  latter  term)  "is  an  entirely  sub- 
jective quality."  (4.)  "On  ne  doit  pas  oublier 
que  le  vigneron  etablit  1'egalite  des  deux  ophe- 
limites  pour  lui,  et  que  le  laboureur  fait  de  m£me, 
mais  qu'il  n'y  a  aucun  rapport  entre  Pophelimite 
du  vin  pour  le  vigneron  et  pour  le  laboureur,  ni 
entre  I'opheliniite  du  ble  pour  le  vigneron  et  pour 
le  laboureur.  II  faut  toujours  se  rapeller  ce  car- 
actere  subjectif  de  rophelimite."  (21.)  Now  no 
quantity  of  value,  irrespective  of  the  particular 

1  Op.  dt.,  p.  81. 

a  Cours  d'i&conomie  Politique,  vol.  I,  pp.  1-40.  The  numerals  in  the  text 
refer  to  pages  in  this  volume. 


JEVONS,  PARETO  AND  BOHM-BAWERK        87 

holder  of  the  good,  emerges  for  Pareto.  Value 
is  either  a  "rapport  de  convenance"  between  a 
man  and  a  good,  i.e.,  ophelimity,  or  is  a  "taux 
d'echange,"  a  ratio  between  two  goods.  (30.)  The 
older  term,  "puissance  d'achat,"  power  in  ex- 
change, which  John  Stuart  Mill  makes  synony- 
mous with  value  in  exchange,  is,  at  bottom, 
nothing  but  a  vague  conception  of  ophelimity. 
(30.)  The  two  conceptions,  ratio  of  exchange  and 
ophelimity,  are  to  be  sharply  distinguished,  power 
in  exchange  is  ruled  out  as  a  vague  and  confused 
conception,  and  value  as  an  objective  quantity 
does  not  appear  at  all. 

Davenport,  who  recognizes  clearly  "the  rich- 
man-poor-man  complication,"1  and  avoids,  for 
the  most  part,  the  confusion  into  which  others 
have  fallen,  of  mixing  a  demand-price  curve  and 
a  utility  curve  (a  confusion  dealt  with  in  detail 
in  the  next  chapter),  and  who  accepts  the  psy- 
chological assumption  of  subjective  isolation  un- 
reservedly,2 reaches,  as  already  indicated,  the 
same  conclusion  regarding  the  nature  of  value. 
For  him  there  is  no  social  validity  in  value  ex- 
cept as  a  ratio  of  exchange.3 

The  same  may  be  said  for  Bb'hm-Bawerk,  so 
far  as  his  formal  analysis  goes.  It  is  true  that  he 
recognizes  the  existence  of  an  "objective  value  in 
exchange"4  in  addition  to  "subjective  value" 

1  Value  and  Distribution,  p.  444. 

1  Professor  Davenport's  attitude  on  this  point  we  shall  discuss  more 
fully  in  chapter  vm. 

*  Ibid.,  pp.  184,  n.,  and  830-31. 

4  It  is  not  wholly  clear  whether  or  not  BShm-Bawerk  means  his  "  ob- 
jective value  in  exchange"  to  be  considered  as  an  absolute  or  as  a  relative 
concept.  His  formal  definition  ("Grundztige  der  Theorie  des  wirtschaft- 


38  SOCIAL  VALUE 

and  "subjective  value  in  exchange,"  and  in  addi- 
tion to  price,1  but  he  makes  no  effort  to  exhibit  its 
nature,  or  to  show  its  origin.  His  study  has  to 
do  with  individual  subjective  ratios,  between  the 
marginal  utilities  of  two  goods,  and  the  market 
ratio,  or  price,  that  results  from  the  meeting  of 
these  individual  ratios  —  not  utilities  —  in  the 
market.  The  nature  of  his  objective  exchange 
value  is  expected  to  become  clear,  somehow,  from 
this  surface  determination  of  price:  — 

Exchange  Value  is  the  capacity  of  a  good  to  obtain  in 
exchange  a  quantity  of  other  goods.  Price  is  that  other 
quantity  of  goods.  But  the  laws  of  these  two  coincide.  So 
far  as  the  law  of  price  explains  that  a  good  actually  obtains 
such  and  such  a  price,  and  why  it  obtains  it,  it  affords  at 
the  same  time  the  explanation  that  the  good  is  capable,  and 
why  it  is  capable,  of  obtaining  a  definite  price.  The  law 
of  Price,  in  fact,  contains  the  law  of  Exchange  Value.2 

lichen  GGterwerts,"  Conrad's  Jahrbiicher,  N.  F.,  xm,  1886,  p.  5)  is  as 
follows  :  "Hierunter  ist  zu  verstehen  die  objective  Geltung  der  G  liter  im 
Tausch,  oder  mil  anderen  Worten,  die  Moglichkeit  filr  sie  im  Austausch 
eine  Quantitat  anderer  wirtschaftlicher  Giiter  zu  erlangen,  diese  M8g- 
lichkeit  als  eine  Kraft  oder  Eigenschaft  der  ersteren  Giiter  gedacht."  The 
concluding  phrase  would  seem  to  point  to  an  absolute  conception,  as 
would  also  his  criticism  of  the  expressions,  "ratio  of  exchange,"  "Aus- 
tauschverhaltnis,"  and  "  Tauschfuss"  (Ibid.,  p,  478,  n.) :  "Diese  Ausdriicke 
haben  namlich  eine  Nflance  an  sich,  die  es  unmoglieh  macht,  sie  sprach- 
lich  den  Giitern  als  Eigenschaft  beizulegen,  oder  von  einer  grosseren 
oder  geringeren  Hohe  derselben  zu  sprechen."  But,  on  the  other  hand, 
his  identification  of  the  concept,  "objective  value  in  exchange,"  with  the 
term  "power  in  exchange"  of  the  English  economists  (in  both  the  pas- 
sages referred  to)  would  seem  to  make  the  relative  implication  in  the  con- 
cept unavoidable,  and  perhaps  there  is  no  point  to  raising  the  question. 
His  criticism  of  Hermann  in  the  Capital  and  Interest  (p.  203)  is  based  on 
the  relative  conception  of  value.  Cf.  our  discussion  of  the  practical  usage 
of  the  Austrians  in  chapters  XI  and  xvm. 

1  Whether  price  be  defined  as  a  quantity  of  goods  given  for  a  good,  or  as 
the  ratio  between  the  two  quantities  of  goods  exchanged,  is  for  present 
purposes  immaterial. 

1  Positive  Theory,  p.  132. 


JEVONS,  PARETO  AND  BOHM-BAWERK         39 

But  (as  will  be  elaborated  more  fully  in  chapter 
vi),  Bohm-Bawerk's  law  of  price  does  not  ex- 
plain the  why  any  more  than  do  those  of  Jev- 
ons  and  Pareto,  and  the  assumption  that  an 
"objective  value  in  exchange"  exists,  in  addition 
to  the  ratio  of  exchange  and  the  subjective 
values,  might  just  as  logically  be  added  to  their 
systems  as  to  his,  with  the  assumption  that  the 
problem  of  its  nature  and  causes  had  been 
cleared  up.  The  Austrian  analysis,  even  with 
Professor  Clark's  correction,  is  simply  an  expla- 
nation of  the  modus  operandioi  the  determination 
of  particular  ratios  in  the  market.  It  tells  us 
nothing  of  quantitative  values,  and,  in  fact,  as- 
sumes a  whole  system  of  values  already  prede- 
termined, before  the  question  of  any  particular 
price  can  be  approached.1, 

1  See  chapter  vi,  infra. 


CHAPTER  V 

DEMAND   CURVES  AND  UTILITY  CURVES 

MUCH  of  the  foregoing  would  be  needless  were 
it  not  for  the  fact  that  there  has  been,  and  is,  in 
the  writings  of  the  Austrians  and  those  who  have 
followed  them,  a  confusion  of  two  very  different 
things :  on  the  one  hand,  the  curve  of  utility  for 
a  single  individual  of  a  given  good,  measured  in 
terms  of  money,  on  the  assumption  that  the 
marginal  utility  of  money  remains  constant  to 
him;  and,  on  the  other  hand,  the  demand-price 
curve  of  that  commodity  for  a  whole  community 
or  a  "trading  body,"1  made  up  of  many  individ- 
uals, differing  in  wealth  and  in  tastes.2  The  for- 
mer curve  does  express  a  diminishing  scale  of 
absolute  feeling-magnitudes,3  concerned  with  the 
consumption  of  the  good.  The  latter  does  not. 
The  latter  is  not  necessarily  a  diminishing  utility 
curve  at  all,  for  the  poor  man  whose  price  offer 
is  lowest  may  easily  desire  the  good  more  in- 
tensely than  does  the  rich  man  whose  demand 
price  is  highest.  These  confusions,  in  the  writ- 
ings of  Bohm-Bawerk  and  Wieser,  especially, 
have  been  adequately  commented  on  by  Pro- 

1  See  Jevons,  Theory  of  Pol.  Earn.,  3d  ed.,  pp.  88-90;  95-96. 

1  See,  especially,  Pareto,  op.  cit.,  vol.  i,  pp.  36-37. 

1  Our  question  here  is  primarily  a  logical,  and  not  a  psychological,  one, 
else  I  should  choose  a  different  term  from  "feeling-magnitude."  For  the 
present,  I  am  accepting  the  Austrian  psychology,  and  attacking  the 
Austrian  logic.  Cf.  the  chapter  in  this  work  on  the  psychology  of  value. 


DEMAND  CURVES  AND  UTILITY  CURVES      41 

fessor  Davenport,1  who  adheres  pretty  carefully 
throughout  to  the  distinction  drawn  above,  and 
to  the  strictly  individualistic,  subjectivistic  con- 
ception of  price  determination,  with  its  correlate 
of  relativity.  Jevons's  confusion  on  this  point  has 
been  noted  by  Marshall.2  It  is  amazing,  really, 
when  one  sets  about  to  find  them,  how  numerous 
are  the  occasions  on  which  leading  economists 
have  been  guilty  of  this  confusion  —  a  confusion 
that  utterly  vitiates  very  many  of  the  conclu- 
sions based  upon  it.  In  truth,  Professor  Daven- 
port is  not  far  wrong  when  he  asserts  that  "the 
general  understanding  of  Austrian  theory  has 
come  to  be  that  it  explains  market  value  by  mar- 
ginal utility,  and  resolves  market  value  into 
marginal  utility.*' 3 

To  go  through  the  roll  of  the  economists  in 
pointing  out  this  confusion  is  a  needless  task  here, 
but  a  few  representative  names  must  be  called, 
in  addition  to  those  mentioned  above.  Thus, 
Pierson : 4  — 

There  is  nothing  to  prevent  our  treating  a  group  of  per- 
sons as  a  unit,  and  examining  the  position  which  commodi- 
ties occupy  in  relation  to  that  unit.  If  we  do  this,  we  shall 
see  that  the  above  diagram  [the  regular  diminishing  utility 
diagram  of  Jevons],  depicting  the  position  which  they 
occupy  in  many  cases  in  relation  to  the  individual,  must 
depict  the  position  which  they  occupy  in  a  still  larger  num- 
ber of  cases  in  relation  to  the  group.  And  the  truth  of  this 
statement  is  greater  in  proportion  to  the  size  of  the  group. 

i  Op.  cit.,  pp.  300,  312,  313  et  seq.,  320,  325,  n.,  327,  328,  n.,  329,  and 
chap.  xvn. 

*  Principles,  1898  ed.,  p.  176. 

»  Op.  cit.,  p.  300. 

4  Principles  of  Economics,  London,  1902,  p.  57. 


42  SOCIAL  VALUE 

Similar  confusions  appear  in  Professor  Patten's 
Theory  of  Prosperity,  in  a  number  of  places.1 
President  Hadley's  discussion  of  "  Speculation  " 
falls  into  this  confusion,  also.2  Professor  Ely's 
confusion  on  this  point  is  instanced  in  his  Out- 
lines of  Economics,  1908  edition,  pp.  358-59. 3 
Schaeffle,  in  his  Quintessence  of  Socialism,*  treats 
utility  as  if  it  were  demand.  With  Professor  Flux 
it  seems  more  a  deliberate  identification  than 
an  unconscious  confusion,  as  he  recognizes  very 
clearly  the  complication  which  differences  in 
wealth  bring  in,  and  yet  none  the  less  declares, 
"The  measure  of  the  exchange  value  is,  then,  the 
utility  which  is  on  the  margin  of  not  being  real- 
ized, or  the  marginal  utility,"  and  "The  series  of 
marginal-demand-prices,  corresponding  to  all  the 
varied  possible  scales  of  supply,  register,  in  fact, 
the  utility  of  the  marginal  supply  for  each  such 
scale." 5  It  is  somewhat  disheartening,  however, to 
find  Professor  Marshall,  who  has  pointed  out  the 
confusion  on  the  part  of  Jevons,  allowing  his  mar- 
ginal notes  to  speak  of  "utility  and  cost"  when 
the  body  of  the  text,  to  which  they  refer,  is  dis- 
cussing demand  and  supply.6  And  still  more  dis- 
heartening to  find  Professor  Davenport,  at  the 

1  Page  18,  "The  consumption  of  all  the  individuals  in  a  community 
or  nation  can  also  be  represented  by  this  diagram  if  their  feelings,  senti- 
ments, and  habits  are  nearly  enough  alike  to  create  a  normal  type."  —  A 
statement  which  is  defensible  only  if  "habits"  be  stretched  to  include 
incomes!  See,  also,  pp.  28  (diagram)  and  82. 

*  Economic*,  1904  ed.,  pp.  101-104.] 

1  See  supra,  p.  17,  n. 

4  English  edition,  London,  1889,  pp.  90-91. 

8  Flux,  A.  W.,  Economic  Principles,  London,  1904.  Compare  pp.  4, 
29,  and  27. 

«  Principles,  1907  ed.,  pp.  348-50. 


DEMAND  CURVES  AND  UTILITY  CURVES      43 

end  of  his  cautiously  written  volume,  marked 
throughout  by  the  greatest  clearness  of  thought, 
and  by  especially  painstaking  care  in  the  criti- 
cism of  this  confusion  in  the  writings  of  others, 
saying:  — 

Limitation  upon  the  supply  of  goods  relatively  to  the 
need  gives  value.  Thus  value  in  producible  goods  is  ulti- 
mately explained  by  human  desires  over  against  a  limi- 
tation of  supply  due  either  to  the  shortage  of  instrumental 
goods  or  to  the  irksomeness  of  effort,  or  to  both. 

With  great  esteem  for  good  singing,  and  with  the  rarity 
of  good  singers,  the  high  gains  of  prima  donnas  find  suffi- 
cient explanation. 

This,  as  a  separate,  unqualified  proposition  in 
the  "Summary  of  Doctrine,"1  is  hardly  to  be 
counted  anything  but  a  lapsus,  even  though 
recognition  is  later  accorded  to  the  necessity  of 
backing  up  "utility"  with  "purchasing  power." 
But  it  cannot  be  too  strongly  insisted,  in  the 
first  place,  that  only  particular  ratios,  market 
relations,  can  come  out  of  the  individualistic 
analysis  of  satisfactions  of  consumption  and  dis- 
satisfactions of  production,  and  that,  in  the 
second  place,  these  ratios,  and  this  relativity, 
are  but  surface  explanations,  that  point  to,  and 
are  based  upon,  something  underlying  and  defi- 
nite —  without  which  they  would  be  hanging  in 
the  air.2 

1  Op.  cit.,  p.  569. 

1  As  shown  in  chapter  n.  An  interesting  illustration  of  this  general 
conclusion  as  to  the  significance  of  the  results  based  on  the  individualistic 
analysis  is  found  in  the  reformulation  of  the  law  of  marginal  utility  by 
Professor  Irving  Fisher  in  his  "  Mathematical  Investigations  in  the  The- 
ory of  Value  and  Prices,"  Trans,  of  the  Connecticut  Academy  of  Arts  and 
Sciences,  vol.  DC,  p.  87.  The  theory  of  marginal  utility  in  relation  to  prices 


44  SOCIAL  VALUE 

"is  not,  as  sometimes  stated :  'the  marginal  utilities  to  the  same  individual 
of  all  articles  are  equal,'  much  less  is  it:  'the  marginal  utilities  of  the  same 
article  to  all  consumers  are  equal;'  but  the  marginal  utilities  of  all  articles 
CONSUMED  [capitals  mine]  by  a  given  individual  are  proportional  to  the 
marginal  utilities  of  the  same  series  of  articles  for  each  other  consumer,  and 
this  uniform  continuous  ratio  is  the  scale  of  prices  for  those  articles."  This 
conception  of  Professor  Fisher's  is  clear  as  far  as  it  goes,  but  it  by  no  means 
explains  the  action  of  individual  desires  upon  prices.  It  rather  explains 
how  an  already  established  set  of  prices  controls  individual  expenditure 
and  consumption.  Compare,  however,  Bb'hm-Bawerk's  view,  "Grund- 
Eiige,"  Conrad's  Jahrbucher,  K.  F.,  XHI,  1886,  pp.  516  et  seq. 


CHAPTER  VI 

THE  VICIOUS  CIRCLE  OF  THE  AUSTRIANS 

THE  great  and  permanent  service  of  the  Aus- 
trian analysis  is  in  the  fact  that  it  looks  for  the 
explanation  of  value  —  a  psychical  fact  —  in 
human  minds.  Its  essential  defect  is  that  it 
takes  only  a  small  part  of  the  human  mind  for 
that  explanation.  It  makes  two  abstractions, 
neither  of  which  is  allowable:  first,  it  abstracts 
the  "individual  mind"  from  its  vital  and  organic 
union  with  the  social  milieu;  and  second,  it  ab- 
stracts from  the  "individual  mind"  thus  ab- 
stracted, only  those  desires  and  thoughts  which 
are  immediately  concerned  with  the  consumption 
and  production  of  economic  goods  —  really,  in 
the  narrower  analysis  of  "market  price,"  only 
those  concerned  with  the  consumption  of  eco- 
nomic goods.  Now  it  is  at  once  conceded  that 
a  science,  in  explaining  its  phenomena,  must 
ignore  some  of  the  relations  which  those  phe- 
nomena bear  to  other  phenomena.  No  science 
is  called  upon  to  link  its  facts  with  all  the  other 
facts  in  the  universe.  Some  abstraction,1  much 
abstraction,  is  legitimate  and  necessary.  Where 
to  draw  the  line  is  often  a  perplexing  question, 

1  The  extreme  abstraction  of  the  utility  school  is  made  very  clear  by 
Pareto,  op.  cit.,  introductory  chapter.  He  is  concerned  only  with  "the 
science  of  ophelimity  "(p.  6),  and  ophelimity  is  a  "wholly  subjective  qual- 
ity" (p.  4). 


46  SOCIAL  VALUE 

and  I  do  not  intend  to  lay  down  a  general  rule 
here.  But  there  is  one  familiar  canon  which  the 
Austrians  have  violated  in  drawing  the  line  so 
narrowly  as  they  have  done:  we  must  include 
enough  in  our  explanation  phenomena  to  enable 
us  to  explain  our  problem  phenomenon  in  terms 
other  than  itself.  Concretely,  in  explaining 
value,  we  have  not  solved  the  problem  if  the  ex- 
planation assumes  value.  Rather,  we  are  reason- 
ing in  a  circle.  Now  have  the  Austrians  done 
this?  Wieser  explicitly  rejects  the  older  circle  in 
the  definition  of  value,1  which  made  the  value  of 
A  equal  to  what  it  would  exchange  for,  B,  the 
value  of  B  being  in  turn  equal  to  what  it  would 
exchange  for,  namely,  A,  and  does  point  out  that 
the  value  of  a  good  must  be  treated  as  an  abso- 
lute thing,  independent  of  the  particular  exchange 
that  happens  to  be  made.  He  even  works  out  an 
explanation  of  value  in  purely  psychical  terms,2 
as  it  would  exist  in  a  hypothetical  individual 
economy,  or  in  a  hypothetical  "natural"  com- 
munistic society,  where  all  men's  wants  are 
equally  regarded.  But  when  the  Austrians  come 
to  the  explanation  of  value  as  it  exists  in  society 
as  actually  organized,  the  attempt  to  explain 
value  in  terms  of  individual  desires  for  economic 
goods  (or  individual  aversions  in  connection  with 
their  production)  fails,  and  a  circle  again  emerges : 
Why  has  the  good,  A,  value?  Because  men  der 
sire  it?  No,  that  is  not  enough:  the  men  who 

1  See  supra,  chap.  n. 

*  But  as  later  indicated  (infra,  chap,  xiu),  the  apparent  simplicity  of 
his  analysis  simply  covers  up,  and  does  not  eliminate,  the  complexity  of 
the  situation. 


THE  VICIOUS  CIRCLE  OF  THE  AUSTRIANS     47 

desire  it  must  have  other  economic  goods,  i.e., 
wealth,  with  which  to  buy  it.  And  why  will  these 
other  goods  buy  it?  Because  they  have  value  ! 
For  the  power  is  proportioned,  not  to  the  quan- 
tity of  their  wealth  in  pounds  or  yards  or  other 
physical  units,  but  simply  to  its  amount  in  value. 
—  The  explanation  of  the  value  of  these  goods 
then  becomes  another  problem,  for  which  the 
Austrian  analysis  can  offer  only  the  same  solu- 
tion, with  the  same  circle  in  reasoning,  and  the 
same  problem  of  value  at  the  end.  This  circle  is 
made  explicit  in  Wieser's  treatment:  — 

The  relation  of  natural  value  to  exchange  value  is  clear. 
Natural  value  is  one  element  in  the  formation  of  exchange 
value.  It  does  not,  however,  enter  simply  and  thoroughly 
into  exchange  value.  On  the  one  side,  it  is  disturbed  by 
human  imperfection,  by  error,  fraud,  force,  chance;  and 
on  the  other,  by  the  present  order  of  society,  by  the  exist- 
ence of  private  property,  and  by  the  differences  between 
rich  and  poor,  —  as  a  consequence  of  which  latter  a  second 
element  mingles  itself  in  the  formation  of  exchange  value, 
namely,  purchasing  power.1  [Italics  mine.] 

This  purchasing  power  can  only  be  either  the 
inaccurate  name  of  the  English  School  for  value 
itself,  or  else  a  consequence  of  the  possession  of 
goods  which  have  value  in  the  sense  in  which 
Wieser  uses  the  term  value,  in  the  note  on  page 
53  of  his  Natural  Value  already  quoted.2  The 
circle  becomes  still  more  explicit  in  Hobson.3 
Hobson  attempts  to  coordinate  the  Austrian  the- 
ory with  the  older  cost  theory,  and  in  this  con- 
nection gives  a  table  analyzing  the  forces  that  lie 

1  Op.  cit.,  pp.  61-652.  *  See  supra,  chap.  n. 

*  Economics  of  Distribution,  p.  81. 


48  SOCIAL  VALUE 

back  of  value,  or  "importance,"  from  the  supply 
side,  and  from  the  demand  side.  And  there, 
apparently  oblivious  of  the  obvious  circle,  he 
places  "purchasing  power"  as  one  of  the  ultimate 
factors  on  the  demand  side!  If  the  Austrian 
analysis  attempt  nothing  more  than  the  determi- 
nation of  particular  prices,  one  at  a  time,  on  the 
assumption  that  the  transactions  are,  in  each 
particular  case,  so  small  as  not  to  disturb  the 
marginal  utility  of  money  for  each  buyer  and 
seller,  and  on  the  assumption  that  the  values  and 
prices  of  all  the  goods  owned  by  buyers  and  sell- 
ers are  already  determined  and  known,  except 
that  of  the  good  immediately  in  question,  it  is 
clear  that  it  but  plays  over  the  surface  of  things. 
If  it  attempt  more  it  is  involved  in  a  circle. 


CHAPTER  VII 

PROFESSOR  CLARK'S  THEORY  OF  SOCIAL  VALUE 

AND  all  attempts  to  explain  value  in  terms  of 
these  abstract  factors  must  become  similarly  en- 
tangled. The  Austrians  themselves  have  pointed 
out  that  the  explanation  of  value  from  the  stand- 
point of  individual  costs  involves  a  circle,  that 
costs  resolve  themselves  into  value-complexes, 
and  that  the  cost  theorists  are  really  explaining 
value  by  value.1  I  have  shown  that  the  same  is 
true  of  the  Austrian  attempt  to  reduce  values  to 
terms  of  individual  utilities.  It  is  also  true  of 
Hobson's  attempt  to  combine  the  two  explana- 
tions, as  shown,  and  the  same  could  be  shown  of 
at  least  the  earlier  writings  of  Professor  Marshall.2 
There  is  another  attempt  to  work  out  the  expla- 
nation of  value,  still  in  terms  of  sacrifices  in  pro- 
duction and  satisfactions  in  consumption,  but 
no  longer  from  the  same  standpoint,  which  de- 
serves special  attention  here.  Professor  Clark, 
in  the  Yale  Review  for  1892,  in  the  article  above 
referred  to,  "The  Ultimate  Standard  of  Value" 
(since  reproduced  as  chapter  xxiv  of  the  Dis- 
tribution of  Wealth),  has  attempted  so  to  add  up 
individual  units  of  cost  and  individual  units  of 

1  See  inter  alia  Bohm-Bawerk,  "Ultimate  Standard  of  Value,"  Annals 
of  the  American  Academy,  vol.  v;  also  his  "  Grundziige,"  p.  516,  n.;  Wieser, 
op,  cit.,  bk.  v. 

1  See  Laughlin,  J.  L.,  "Marshall's  Theory  of  Value  and  Distribution," 
Q.  J.  E.,  vol.  i,  pp.  5827-32.  See  also  Marshall's  reply  in  the  same  volume. 


50  SOCIAL  VALUE 

utility,  as  to  get  absolute  social  units  of  utility 
and  cost  either  of  which  might  serve  as  the  ulti- 
mate standard  of  value.  It  will  be  remembered 
that  I  have  already  quoted  from  this  article  with 
reference  to  the  quantitative  nature  of  value, 
and  that  Professor  Clark  stands  as  the  leading 
exponent  of  the  conception  that  value  is  a  social 
fact,  "is  social  and  subjective,"  the  value  put  on 
goods  by  the  social  organism.  In  this  article,  he 
is  seeking  the  unit  of  social  value,  the  measure 
of  the  importance  of  a  good  to  society.  Either 
the  unit  of  social  utility  or  the  unit  of  social 
detriment  would  serve,  but  it  happens,  he  holds, 
that  the  unit  of  detriment  is  the  more  available 
for  purposes  of  measurement,  and  so  the  final 
unit1  of  value  is  the  sacrifice  entailed  by  a  quan- 
tity of  distinctively  social  labor  (p.  261).  Pro- 
fessor Clark  avoids  the  complication  that  labor 
and  capital  work  together,  by  isolating  labor  at 
the  margin,  in  the  manner  made  familiar  in  his 
Distribution  of  Wealth.  Assume  capital  constant, 
introduce  or  subtract  a  small  quantity  of  labor, 
and  whatever  of  product  is  added  or  subtracted 
is  due  to  that  labor  only  (p.  263). 

This  virtually  unaided  labor  is  the  only  kind  that  can 
measure  values.  Attempts  to  use  the  labor  standard  have 
come  short  of  success,  because  of  their  failure  to  isolate 
from  capital  the  labor  to  which  products  are  due. 

Work,  however,  is  miscellaneous  and  hetero- 
geneous. There  is  needed  "a  pervasive  element 

1  There  is  a  needless  complication  here.  For  Professor  Clark's  purposes 
it  is  not  necessary  to  seek  a  unit  of  value;  what  is  needed  is  simply  a  vindi- 
cation of  the  quantitative  social  value  concept.  The  unit  may  then  be 
arbitrarily  chosen  —  e.g.,  the  amount  of  value  in  23.22  grains  of  gold. 
Cf.  the  discussion  of  abstract  units  of  value,  infra,  chap,  xvn,  pp.  183-84. 


CLARK'S  THEORY  OF  SOCIAL  VALUE          51 

in  the  actions,  and  one  that  can  be  measured." 
This  is  "personal  sacrifice,"  which  is  "common 
to  all  varieties  of  labor."  An  isolated  worker, 
making  and  using  his  own  products,  readily  finds 
an  equilibrium  point,  where  utility  and  sacrifice 
are  equal,  and  where  he  stops  his  day's  work 
(pp.  364-65).  If  the  product  of  any  hour's  labor 
be  destroyed  (p.  366)  he  will  not  suffer  the  loss 
of  anything  more  important  than  the  product  of 
the  last  hour's  labor,  for  he  will  forego  that,  and 
re-create  the  good  with  the  higher  utility.  The 
utility  of  the  last  hour's  product  and  the  pain 
of  the  last  hour's  labor  are  equal.  Either  is  his 
unit  of  value. 

Of  society  regarded  as  a  unit  the  same  is  true. 

Take  away  the  articles  that  the  society  gains  by  the 
labor  of  a  morning  hour,  —  the  necessary  food,  clothing 
and  shelter  that  it  absolutely  must  have,  —  and  it  will 
divert  to  making  good  the  loss  the  work  performed  at  the 
approach  of  evening,  which  would  otherwise  have  produced 
the  final  luxuries  on  its  list  of  goods. 

(It  might  be  questioned  parenthetically  here 
whether  all  are  fed  before  any  begin  to  enjoy 
luxuries,  or,  if  not,  just  what  is  considered  the 
"socially  necessary"  amount  of  food,  and  whom 
does  social  necessity  require  that  we  feed  before 
we  devote  an  hour  to  making  luxuries?)  Professor 
Clark  finds  the  final  hour  of  social  labor-pain  to 
be  a  compound,  the  sum  of  the  final  hour's  dis- 
satisfactions of  all  the  laborers.  This  sum  is  the 
ultimate  standard  of  value.  It  is  in  equilibrium  with 
the  sum  of  the  utilities  of  the  final  hour's  products 
to  all  the  laborers  considered  as  consumers.  This 


52  SOCIAL  VALUE 

is  illustrated  by  a  diagram  on  page  271.  But  the 
problem  still  remains  as  to  the  value  of  particular 
goods.  Granted  that  the  sum  of  the  satisfactions 
got  from  the  total  amount  —  a  vast  amount  — 
of  the  final  hour's  product  is  equal  to  the  sum  of 
the  pains  incurred  in  producing  this  giant  com- 
posite, and  granted  that  the  pain  incurred  by 
each  man  in  making  his  part  of  the  composite  is 
equal  to  the  satisfaction  gained  by  him  in  con- 
suming his  part  of  the  composite  —  not  the  same 
part !  —  the  problem  still  remains  as  to  the  con- 
nection of  the  marginal  utility  and  the  value  of 
the  particular  goods  that  make  up  the  composite, 
with  social  labor.  Professor  Clark  concedes  at 
once  that  there  is  no  necessary  connection  be- 
tween the  utility  of  the  good  to  him  who  enjoys 
it,  and  the  pain  of  making  it  to  him  who  makes  it. 
What  connection  is  there,  then,  between  the  value 
of  the  good  and  social  labor?  It  is  at  this  point,  I 
venture  to  suggest,  that  Professor  Clark's  argu- 
ment fails.  I  shall  not  follow  his  argument  in 
detail,  but  shall  quote  a  couple  of  paragraphs 
which  seem  to  exhibit  the  failure  (pp.  272-73) :  — 

The  burden  of  labor  entailed  on  the  man  who  makes  an 
article  stands  in  no  relation  to  its  market  value.  The  prod- 
uct of  one  hour's  labor  of  an  eminent  lawyer,  an  artist,  a 
business  manager,  etc.,  may  sell  for  as  much  as  that  of  a 
month's  work  of  an  engine  stoker,  a  seamstress  or  a  stone- 
breaker.  Here  and  there  are  "prisoners  of  poverty,"  put- 
ting life  itself  into  products  of  which  a  wagon  load  can  lit- 
erally be  bought  for  a  prima  donna's  song.  Wherever  there 
is  varying  personal  power,  or  different  position,  giving  to 
some  the  advantage  of  a  monopoly,  there  is  a  divergence 
of  cost  and  value,  if  by  these  terms  we  mean  the  cost  to  the 


CLARK'S  THEORY  OF  SOCIAL  VALUE          53 

producer,  and  the  value  in  the  market.  Compare  the  labor 
involved  in  maintaining  telephones  with  the  rates  de- 
manded for  the  use  of  them.  Yet  of  monopolized  products 
as  of  others  our  rule  holds  good ;  they  sell  according  to  the 
disutility  of  the  terminal  social  labor  expended  in  order  to 
acquire  them. 

But  suppose  they  are  bought  with  monopolized 
products,  and  suppose  that  a  monopoly  element 
enters,  at  some  stage  or  other,  into  every  product 
of  the  market,  and  in  varying  degrees  in  each, 
either  in  the  form  of  control  of  raw  material,  or 
special  native  mental  or  physical  aptitude,  or  pa- 
tent right,  or  any  other  of  the  innumerable  forms 
that  monopoly  takes?  Can  these  monopoly  prod- 
ucts then  call  forth  a  definite  amount  of  social 
labor?  Or  can  they  merely  call  out  a  definite 
amount  of  value? 1  "Differences  in  wealth  between 
different  producers  cause  the  cost  of  products  to  vary 
from  their  value."  (Italics  mine.)  But  surely  this 
is  our  old  circle  again.  If  differences  in  wealth, 
which  is  the  embodiment  of  value,  are  to  modify 
the  working  of  the  "  pervasive  element "  of 
"  personal  sacrifice  "  (p.  263),  it  is  difficult  to  see 

1  The  issue  appears  to  be'shifted  here.  If  an  ultimate  cause  of  value  is 
being  sought,  it  is  certain  that  labor  does  not  supply  it  for  the  monopolized 
goods;  and  if  it  be  simply  a  measure  of  the  amount  of  value  embodied  in 
the  monopolized  goods  that  is  looked  for,  then  it  is  clear  that  goods  pro- 
duced entirely  by  competitive  labor  (assuming  that  such  goods  exist, 
which  I  deny)  can  fulfill  this  function  only  by  virtue  of  being  themselves 
taluable  —  and  that  they  serve  this  purpose  no  better  than  other  goods 
into  which  a  monopoly  element  enters.  The  doctrine  here  criticized  goes 
back  to  Ricardo:  "  If  the  state  charges  a  seignorage  for  coinage,  the  coined 
piece  of  money  will  generally  exceed  the  value  of  the  uncoined  piece  of 
metal  by  the  whole  seignorage  charged,  because  it  will  require  a  greater 
quantity  of  labour,  or,  which  is  the  same  thing,  the  value  of  the  produce  of  a 
greater  quantity  of  labour,  to  procure  it."  (Italics  mine.)  Ricardo,  Works, 
McCulIoch  edition,  1852,  p.  213. 


54  SOCIAL  VALUE 

how  that  pervasive  element  can  in  any  way  be 
an  ultimate  explanation  or  measure  of  value. 

The  rich  worker  stops  producing  early,  while  the  sac- 
rifice entailed  is  still  small;  but  his  product  sells  as  well 
as  if  it  were  costly. 

If  we  say  that  the  prices  of  things  correspond  with  the 
amount  and  efficiency  of  the  labor  that  creates  them,  we 
say  what  is  equivalent  to  the  above  proposition.  The  effi- 
ciency that  figures  in  the  case  is  power  and  willingness  to 
produce  a  certain  effect.  The  willingness  is  as  essential 
as'4the  power.  .  .  .  Moreover,  the  effect  that  gauges  the 
efficiency  of  a  worker  is  the  value  of  what  he  creates;  and 
this  value  is  measured  by  the  formula  that  we  have  attained. 

But  surely  the  circle  is  very  clear  here :  the  price 
(the  expression  of  the  value)  of  the  good  depends 
on  the  efficiency  of  the  labor  that  produces  it; 
and  the  efficiency  of  the  labor  depends  on  the 
value  (of  which  price  is  the  expression)  of  the 
good  produced.  Our  "pervasive  element"  is 
complicated,  as  a  determinant  of  social  value,  with 
several  factors,  among  them  the  value  of  the  wealth 
of  the  different  producers,  and  the  efficiency, 
which  can  be  defined  only  in  terms  of  value 
product,  of  the  workers.  Value  is  an  ultimate  in 
the  explanation  of  value,  and  the  effort  to  make 
individual  costs  and  utilities  an  ultimate  expla- 
nation of  value  has  failed  —  as  it  must  needs 
fail  —  even  in  the  hands  of  Professor  Clark. 

The  validity  of  this  criticism,  assuming  it 
valid,  in  no  way  invalidates  Professor  Clark's 
contention  that  value  is,  after  all,  the  work  of  the 
social  organism,  and  that  the  value  of  a  good,  at  a 
given  time,  measures  its  importance  to  the  social 
organism  at  that  time.  The  difficulty  with  the 


CLARK'S  THEORY  OF  SOCIAL  VALUE  55 

analysis  just  criticized  is  that  it  has  not  been  an 
analysis  of  an  organic  process,  but  rather,  a  math- 
ematical study  of  sums.  The  individuals  have 
been  treated,  not  as  interacting  in  their  mental 
processes,  but  as  isolated  atoms,  each  of  whom 
has  a  definite  individual  quantum  of  pain  or  plea- 
sure, and  the  social  unit  of  pain  or  pleasure  has 
been  treated  as  simply  a  sum  of  these.  But  it  is 
characteristic  of  an  organism  that  the  simple 
rules  of  arithmetic  do  not  hold  precisely  in  its 
activity.  The  whole  is  more  than  the  sum  of  its 
parts,  and  something  different  from  that  sum. 
Professor  Clark  elsewhere  says :  — 

But  the  owner  is  a  part  of  the  social  body,  and  is  the 
organic  whole  indifferent  to  his  suffering?  If  so,  society  is 
an  imperfect  and  nerveless  organism.  It  ought  to  feel,  as 
a  whole,  the  sufferings  of  every  member,  and  what  makes 
or  mars  the  happiness  of  every  slightest  molecule,  should 
make  or  mar  the  happiness  of  all. 

A  sympathetic  connection  between  members  of  society 
exists,  etc.1 

True:  and  indicative  of  the  true  line  of  study 
for  the  conception  of  value  as  a  product  of  an 
organic  society.  But  in  the  foregoing  analysis 
we  have  no  hint  of  "nerves"  or  social  sympathy 
or  other  manifestation  of  a  collective  mental 
activity.  The  "social  psychology"  promised  on 
page  261  of  the  article  just  reviewed,  turns  out 
not  a  social  psychology  at  all,  but  simply  a  sum- 
mation of  the  results  of  many  individual  psycholo- 
gies. But  the  line  along  which  the  true  nature  of 
value  is  to  be  found  is  clearly  indicated  in  the 

1  Philosophy  of  Wealth,  1892  ed.,  p.  83. 


50  SOCIAL  VALUE 

general  conception  of  the  psychical  organic  unity 
of  society,  and  it  remains  for  the  present  writer 
to  make  use  of  the  studies  in  social  psychology 
of  Tarde,  Cooley,  Baldwin,  and  others,1  not 
available,  for  the  most  part,  when  Professor 
Clark's  article  was  written,  in  an  effort  to  get 
nearer  the  heart  of  the  problem. 

The  doubly  abstract  conceptions  of  individual 
costs  and  individual  satisfactions,  connected 
with  economic  goods,  —  abstracted  first  from 
the  social  milieu,  and  second,  from  the  rest  of 
the  individual's  interests  and  desires,  —  lead  us 
around  in  a  circle,  from  value  to  value,  but  never 
to  anything  else.  It  is  the  belief  of  the  writer 
that  we  get  out  of  the  circle  only  by  broadening 
our  explanation  phenomena,  by  giving  up  these 
abstractions,  and  getting  back  to  the  concrete 
reality  of  the  total  intermental  life  of  men  in 
society. 

1  Tarde,  The  Laws  of  Imitation  ;  Psychologic  Economique,  2  vols.,  Paris, 
1902.  Cooley,  C.  H.,  Human  Nature  and  the  Social  Order  ;  Social  Organiza- 
tion. Baldwin,  Mark,  Social  and  Ethical  Interpretations.  Elwood,  C.  A., 
Some  Prolegomena  to  Social  Psychology,  Chicago,  1901;  "The  Psychological 
View  of  Society,"  American  Journal  of  Sociology,  March,  1910.  Hayden, 
Edwin  Andrew,  The  Social  Will,  1909.  No  attempt  is  made  at  an  exhaus- 
tive list  here,  nor  are  the  writers  mentioned  to  be  held  accountable  for  the 
views  maintained  in  the  text,  though  their  point  of  view  is  in  general  that 
which  I  shall  maintain. 


PART  III 

THE  PRESUPPOSITIONS  OF  ECONOMIC 
THEORY 


CHAPTER  VIII 

THE  PHILOSOPHICAL  AND   PSYCHOLOGICAL  PRESUP- 
POSITIONS 

THE  connection  between  social  philosophy,  on 
the  one  hand,  and  metaphysics  and  epistemology 
on  the  other  hand,  has  always  been  a  close  one, 
—  a  fact  not  always  adequately  recognized  by 
writers  in  the  field  of  social  science,  in  economics, 
especially.  Scientists  of  ten  "ignore"  philosophy, 
holding  that  their  concern  is  simply  with  the 
world  of  phenomenal  "facts,"  and  that  the  injec- 
tion of  philosophic  considerations  is  illicit  and 
unscientific.  And  this  is  often  well  enough  in  the 
field  of  the  physical,  chemical,  and  biological 
sciences,  where  the  procedure  is  primarily  induc- 
tive, and  the  data  are  got  from  sense  observa- 
tion. But  in  the  social  sciences,  where  the  pro- 
cedure is  so  largely  deductive,  and  where  the 
data  are  often  principles  of  mind,  whose  truth  is 
assumed  as  a  starting  point  for  investigation,  and 
especially  in  economic  theory,  such  an  attitude 
cannot  be  justified.  For  philosophical  assump- 
tions will  creep  in,  and  the  scientist  has  no  option 
about  it.  The  only  thing  he  can  do  is  to  be  criti- 
cal, and  know  definitely  what  philosophical  as- 
sumptions he  is  making,  —  and  most  of  our  trea- 
tises on  economic  theory  do  not  bear  evidence 
that  this  critical  work  has  been  done. 


60  SOCIAL  VALUE 

There  may  be  traced  in  the  history  of  phi- 
losophy, in  the  ancient  world,  and  also  in  the 
modern  era,  three  main  stages  in  philosophic 
thought,  each  accompanied  by  a  distinctive  set 
of  ideas  concerning  the  nature  of  society.  In  dis- 
tinguishing these  three  stages,  in  showing  the 
relation  of  each  to  social  philosophy,  and  espe- 
cially in  tracing  a  parallel  between  the  philosophy 
of  the  ancients  and  that  of  modern  times,  I 
recognize  the  grave  dangers  of  giving  a  superfi- 
cial treatment,  and  of  distorting  facts  to  make 
them  fit  a  schematism.  I  recognize,  further,  that 
a  host  of  details  and  a  multitude  of  differences 
must  be  ignored  in  tracing  the  parallel  I  propose. 
Considerations  of  space,  moreover,  prevent  such 
a  detailed  justification  of  the  views  here  pre- 
sented as  would  be  required  were  this  more  than 
a  minor  phase  of  my  subject.  The  need  for  this 
is  lessened,  however,  by  the  fact  that  much  of 
what  follows  is  part  of  the  commonplaces  of  the 
history  of  philosophy,  —  albeit  a  repetition  of  it 
seems  needed  in  a  criticism  of  economic  theory. 
The  three  stages  are:  the  dogmatic  stage;  the 
skeptical  stage;  and  the  critical  stage.  In  Greek 
philosophy,  the  first  stage  is  represented  by  the 
cosmological  philosophers,  as  Thales,  Anaxim- 
enes,  and  Anaximander,  who,  with  perfect  con- 
fidence in  the  power  of  their  minds  to  solve  the 
riddles  of  the  universe,  or  rather,  without  ques- 
tioning that  point  at  all,  proceeded  to  spin  out 
poetical  accounts  of  the  origin  and  nature  of 
things.  The  second  stage  is  represented  by  the 
Sophists,  who,  struck  by  the  manifold  diver- 


THE  PHILOSOPHICAL  PRESUPPOSITIONS       61 

gences  in  the  philosophies  of  the  earlier  schools, 
and  by  the  lack  of  harmony  between  the  god- 
given  laws  and  rules  of  morality  which  earlier 
tradition  had  handed  down,  and  the  needs  of  the 
social  conditions  among  which  they  lived,  found 
themselves  unable  to  find  truth  readily,  and 
reached  the  conclusion  that  each  man  is  the 
measure  of  truth,  that  there  are  no  universal 
criteria,  or  valid  standards.  The  third  stage  be- 
gins with  Socrates,  who  sought  for  a  common 
principle  of  truth  and  justice  in  the  midst  of 
divergences,  and  this  critical  movement,  contin- 
ued by  Plato  and  Aristotle,  led  to  conceptions  of 
unity  once  more. 

Now  the  social  philosophy  which  goes  with 
the  first  stage  is  relatively  undefined.  It  is  for 
the  most  part  content  with  the  existing  order, 
recognizes  a  supernatural  basis  for  it,  and  raises 
few  questions.  The  social  philosophy  of  the 
second  period  is  intensely  individualistic.  In 
the  third  stage,  the  emphasis  upon  social  soli- 
darity and  upon  a  unified,  organic  conception 
of  society,  a  society  which  is  paramount  to  in- 
dividual interests  and  rights,  comes  to  the  fore 
again.  The  extreme  poles  of  thought  are,  on 
the  one  hand,  an  individualism  which  leaves 
scant  room  for  any  very  significant  social  rela- 
tions whatsoever,  and,  on  the  other  hand,  a 
socialism  —  like  that  of  the  Republic  —  which 
swallows  up  the  individual.  The  compromise 
view,  expressed  in  the  Aristotelian  doctrine  of 
the  relation  between  "form"  and  "matter," 
applied  to  the  social  problem,  finds  the  individual 


62  SOCIAL  VALUE 

very  real,  to  be  sure,  but  still  real  only  in  his  so- 
cial relationships.  Individual  activities  are  facts, 
but  social  activity  is  more  than  a  mere  sum  of 
individual  activities.  Society  and  the  individual 
are  alike  abstractions,  if  viewed  separately. 

The  mediaeval  conflict  over  realism  and  nom- 
inalism really  derives  its  interest  from  the  prac- 
tical social  issues  involved,  for  the  reality  of 
the  Church,  as  more  than  a  mere  aggregate  of 
its  members,  and  the  validity  of  Christian  doc- 
trine, as  more  than  the  sum  of  individual  beliefs, 
are  at  stake. 

The  cycle  began  again  in  modern  times.  As 
representatives  of  the  dogmatic  period  in  mod- 
ern philosophy,  Des  Cartes  and  Spinoza  may  be 
chosen.  They  were  not,  of  course,  naively  dog- 
matic, for  philosophy  had  learned  much  from 
its  many  disappointments,  and  DesCartes,  espe- 
cially, starts  out  with  reflections  which  would 
seem  to  make  him  very  much  a  skeptic.  And  yet 
each  believed  in  the  power  of  the  mind  to  draw 
absolute  truth  from  itself,  and  each  proceeded  in 
a  highly  rationalistic  way  to  build  up  his  system. 
The  very  title  of  Spinoza's  great  work  indicates 
this  attitude  of  mind:  "Ethica  more  geometrico 
demonstrata."  The  conception  of  society  which 
characterizes  this  period  is,  again,  not  naive,  but 
still  has  a  supernatural,  or  at  least  a  superhuman, 
basis,  for  it  is  in  a  Law  of  Nature  (capitalized 
and  personified)  that  social  institutions  find  their 
origin  and  justification.  Critical  reflections, 
starting  with  Locke,  and  passing  through  Berke- 
ley to  the  absolute  skepticism  of  Hume,  bring  in 


THE  PHILOSOPHICAL  PRESUPPOSITIONS        63 

the  second,  or  skeptical,  period,  in  which  the 
rationalistic-dogmatic  certitude  of  Spinoza  and 
DesCartes  is  banished.  And  going  with  this  move- 
ment in  philosophic  thought  comes  the  extreme 
individualism  of  Rousseau  in  politics,  and  Adam 
Smith  in  economics.  The  movement  away  from 
skepticism,  beginning  with  Kant,  puts  the  world, 
and  especially  society,  back  into  organic  connec- 
tions again,  and  we  have,  in  Hegel,  especially, 
society  to  the  fore,  and  the  individual  real  only 
as  a  part  of  society.  The  organic  conception, 
revived  by  Hegel,  and  vitalized  by  the  positivistic 
studies  which  applied  the  Darwinian  doctrine  to 
social  phenomena,  has  characterized  the  greater 
part  of  the  social  philosophy  of  the  last  half  hun- 
dred years  —  of  course,  not  without  protest  and 
highly  necessary  criticism. 

Now  all  of  this  is,  of  course,  commonplace. 
And  yet  a  failure  to  recognize  it  has  vitiated  very 
much  thinking  in  the  field  of  economic  theory. 
Economic  thought  is  to-day  very  largely  based 
on  the  philosophic  conceptions  which  charac- 
terize the  period  in  which  economics  began  to 
be  a  differentiated  science,  —  the  skeptical  doc- 
trines of  David  Hume,  the  close  friend  of  Adam 
Smith.1  The  individual  is  all -important;  his 
world  of  thought  and  feeling  is  shut  off  from  that 
of  every  other  man;  social  relationships  are 
largely  mechanical,  and  grow  out  of  calculating 
self-interest  on  the  part  of  the  individual;  social 

1  This  criticism  applies  to  the  teachings  of  James  Mill,  J.  S.  Mill,  and 
other  sensationalist  followers  of  Hume,  even  more  than  to  Adam  Smith. 
But  see  Professor  Albion  W.  Small's  Adam  Smith  and  Modern  Sociology, 
Chicago,  1907,  esp.  p.  51. 


64  SOCIAL  VALUE 

laws  are  conceived  after  the  analogy  of  physical 
laws.  Ethics  and  politics,  however,  have  been 
far  more  influenced  by  later  thinking,  and  the 
organic  conception  of  society  has  largely  domi- 
nated these  sciences  of  late,  while  the  new  science, 
sociology,  free  to  base  itself  more  largely  upon 
present-day  epistemological,  philosophical,  and 
psychological  notions,  has  gone  further  than  any 
other  in  accepting  the  doctrine  of  the  unity 
and  pervasiveness  of  social  relations,  organically 
conceived.  I  think  there  are  few  things  more 
strikingly  in  contrast  than  the  conception  of 
society  which  the  student  meets  in  most  works 
on  economic  theory,  and  that  which  he  meets  in 
studying  the  other  social  sciences.  That  this  is 
so  is  due  precisely  to  the  fact  that  the  economists 
have  too  largely  neglected  philosophy  and  psy- 
v  chology,  and  have  accepted  uncritically  the  as- 
sumptions of  the  founders  of  the  science.  Doc- 
trines accepted  then  have  become  crystallized, 
and  still  form  part  of  the  current  stock  in  trade 
of  economic  science,  even  though  rejected  by 
philosophy  itself. 

To  one  of  these  faulty  doctrines  from  the 
earlier  time,  attention  has  already  been  called. 
It  is  that  the  intensities  of  wants  and  aversions 
in  the  mind  of  one  man  stand  in  no  relation  to 
the  same  phenomena  in  the  mind  of  another  man, 
and  that  there  can  be  no  comparison  instituted 
between  them.  The  individual  is  an  isolated 
monad,1  mechanically  connected  with  his  fellows, 

1  It  is  easy  for  "analysis"  to  separate  society  into  "individual"  mon- 
ads, and  impossible  for  "synthesis"  —  once  the  validity  of  the  analytic 


THE  PHILOSOPHICAL  PEESUPPOSITIONS       65 

who  are  to  him  "a  part  of  the  non-ego"1  but 
spiritually  self-sufficient  and  inaccessible.  The 
doctrine  appears  in  Marshall's  statement:2  "No 
one  can  compare  and  measure  accurately  against 
one  another  even  his  own  mental  states  at  differ- 
ent times,  and  no  one  can  measure  the  mental 
states  of  another  at  all,  except  indirectly  and  con- 
jecturally ,  by  their  effects."  Pareto  I  have  quoted, 
as  also  Jevons,  in  chapter  rv.  The  doctrine  ap- 
pears in  Professor  Veblen's  recent  article  in  criti- 
cism of  Professor  Clark: 3  — 

It  is  evident,  and  admitted,  that  there  can  be  no  balance, 
and  no  commensurability,  between  the  laborer's  disutility 
(pain)  in  producing  the  goods  and  the  consumer's  utility 
(pleasure)  in  consuming  them,  inasmuch  as  these  two  hed- 
onistic phenomena  lie  each  within  the  consciousness  of  a 
distinct  person.  There  is,  in  fact,  no  continuity  of  nervous 

process  is  accepted  —  to  put  society  together  again.  In  fact,  once  the  ana- 
lytic process  is  begun,  and  once  its  results  are  accepted  as  anything  more 
than  matters  of  logical  convenience,  all  unity  and  all  organic  connections, 
whether  in  the  social  or  in  other  fields,  seem  to  vanish  like  a  dissolving 
show.  There  is  a  psychological  doctrine  of  monadism,  quite  as  logical  as 
the  sociological  monadology  here  criticized,  which  finds  it  impossible  to 
link  together  even  the  elements  in  a  single  individual's  mind.  (See  Wil- 
liam James,  Principles  of  Psychology,  1905  ed.,  vol.  i,  pp.  179-80.)  Into 
what  inextricable  difficulties  one  falls,  in  pursuing  the  monadistic  logic, 
is  more  dramatically  illustrated  than  by  anything  else  I  know  by  Brad- 
ley's  Appearance  and  Reality,  esp.  chaps,  n  and  in.  The  most  useful  view- 
point seems  to  be  as  follows:  unity  is  as  much  an  object  of  immediate 
knowledge  as  is  plurality,  —  both  being,  in  fact,  the  products  of  reflective 
thought.  And  unity  is  no  more  called  upon  to  justify  itself,  before  we 
recognize  its  existence,  than  is  plurality.  Cf.  William  James,  The  Meaning 
of  Truth,  New  York,  1909,  p.  xiii;  and  also  his  Psychology,  vol.  I,  pp.  224- 
25.  Cf.  also  the  writings  of  Professor  John  Dewey. 

1  Jevons,  Theory  of  Pol.  Econ.,  3d  ed.,  p.  14. 

1  Principles,  1907,  p.  15  (1898  ed.,  p.  76).  See  also  Marshall's  criticism 
of  Cairnes'  conception  of  supply  and  demand,  in  the  1898  edition  of  the 
Principles,  p.  172. 

1  "  Professor  Clark's  Economics,"  Q.  J.  E.,  1908,  p.  170. 


66  SOCIAL  VALUE 

tissue  [italics  mine]  over  the  interval  between  consumer 
and  producer,  and  a  direct  comparison,  equilibrium,  equal- 
ity, or  discrepancy  in  respect  of  pleasure  and  pain  can,  of 
course,  not  be  sought  except  within  each  self-balanced 
individual  complex  of  nervous  tissue. 

In  the  recent  elaborate  study,  Value  and  Dis- 
tribution, by  Professor  H.  J.  Davenport,  the  the- 
ories based  on  the  conception  of  the  individual 
as  an  isolated  monad,  a  self -complete  whole, 
with  purely  mechanical  relationships  with  other 
men,  find  their  fullest  and  most  self-conscious 
expression,  and  the  philosophical  Jpresuppositions 
are  explicitly  premised.  The  following  quotation 
from  Thackeray's  Pendennis  is  given  as  a  foot- 
note,1 in  which  Professor  Davenport's  own  con- 
ception is  expressed :  — 

Ah,  sir,  a  distinct  universe  walks  about  under  your  hat 
and  under  mine  —  all  things  in  nature  are  different  to  each 
—  the  woman  we  look  at  has  not  the  same  features,  the 
dish  we  eat  has  not  the  same  taste,  to  the  one  and  to  the 
other;  you  and  I  are  but  a  pair  of  infinite  isolations,  with 
some  fellow  islands  a  little  more  or  less  near  us. 

This  is,  of  course,  manifestly  the  theme  of  the 
old  subjectivistic  analysis,  by  which  all  things 
are  reduced  to  thoughts,  sensations,  and  desires 
within  the  individual  soul,  and  in  accordance 
with  which  we  have  none  save  conjectural  know- 

1  Davenport,  op.  cit.,  p.  300,  n.  It  may  seem  somewhat  unfair  to  hold 
a  man  responsible  for  the  view  of  another  writer  which  he  throws  into  a 
footnote  of  his  own  book.  One  who  has  read  Professor  Davenport's  book, 
however,  will  recognize,  I  think,  that  this  quotation  does  express  Pro- 
fessor Davenport's  view.  His  discussion  in  the  text  on  pages  300-301 
affirms  virtually  this  same  doctrine,  as  a  proposition  of  psychology.  See 
also  his  discussions  in  small  type  on  pages  336-37.  His  whole  system  is 
based  upon  this  doctrine. 


THE  PHILOSOPHICAL  PRESUPPOSITIONS       67 

ledge  of  anything  outside  of  our  own  souls.  Now 
a  general  answer  might  be  given  that  this  is  an 
epistemological  principle  which  holds  true  only 
for  what  Kant  calls  the  "Ding  an  sich" — if 
such  a  thing  there  be  —  and  that  there  is  no 
more  reason  why  it  should  apply  to  human  emo- 
tions, considered  purely  as  phenomena,  than  to 
any  other  of  the  phenomena  with  which  science 
busies  itself.  If  this  principle  be  adhered  to,  its 
effect  will  be  simply  to  cast  doubt  on  the  conclu- 
sions of  all  sciences,  physical  as  well  as  psychical. 
Certainly  psychology  would  be  impossible  on 
this  assumption,  except  in  so  far  as  the  psycholo- 
gist claims  only  to  be  working  out  a  science  of  his 
individual  soul,  which,  so  far  as  he  knows,  is  not 
true  of  any  other  individual.  But  it  is  precisely 
not  this  that  psychology  attempts.  It  is  con- 
cerned with  the  laws  and  behavior  of  minds  in 
general,  with  the  "typisch  und  allgemeingultig" 
and  not  with  the  mental  idiosyncrasies  of  the 
particular  individual. 

But  the  doctrine  can  be  met  from  the  stand- 
point of  epistemology  itself.  The  writers  who 
are  responsible  for  this  subjective  analysis,  have 
held  that  mind  is  more  nearly  capable  of  being 
known  by  mind  than  is  anything  else,  since  we 
can  interpret  things  only  in  terms  of  our  own 
experiences.  The  real  nature  of  a  purely  physical 
thing  is  far  more  deeply  hidden  from  our  view 
than  is  the  real  nature  of  a  mental  fact,  even 
though  it  be  in  the  mind  of  another.  And  espe- 
cially would  they  grant  a  degree,  at  least,  of 
objective  currency  to  clearly  phrased  conceptual 


68  SOCIAL  VALUE 

thought.  Now  I  base  myself  upon  the  present 
day  pragmatic  philosophy,1  which  is,  essentially, 
concerned  with  the  problem  of  knowledge.  Its 
principle  is  that  we  believe  things  to  be  true,  not 
because  of  any  knowledge  we  have  of  some  mys- 
tical, absolute  truth,  but  because  of  our  experi- 
ences ..of  utilitarian  sort.  That  is  true  which 
works.  That  is  true  which  we  find  will  satisfy 
our  desires  and  needs.  In  a  word,  desire,  volition, 
values,  lie  at  the  basis  of  intellect.2  Whence  it 
follows,  that  if  our  minds  are  so  constituted  that 
we  understand  each  other  on  the  intellectual 
side,  then  there  must  be  a  still  deeper  and  more 
underlying  similarity  on  the  desire,  feeling,  voli- 
tional side.3  Consequently,  if  there  be  anything 
at  all,  outside  of  our  own  mind,  which  we  can 
understand,  it  must  be  the  feelings  and  emotions 
of  other  men. 

Considerations  of  a  practical  nature  give  us 
the  strongest  possible  grounds  for  a  belief  that 
human  desires,  feelings,  etc.,  are  homogeneous 
and  communicable.  The  fact  is  that  we  all  have 
back  of  us  many  millions  of  years  of  evolutionary 
history  in  the  same  general  environment.  In  the 
past,  with  relatively  minor  variations,  the  same 
influences  have  played  upon  our  ancestors  from 

1  See,  especially,  William  James,  Pragmatism,  and  The  Meaning  of 
Truth ;  John  Dewey,  Es$ay»  in  Logical  Theory ;  and  F.  C.  S.  Schiller, 
Humanism. 

*  The  utter  impossibility  of  adequately  summing  up  a  philosophic  doc- 
trine in  two  or  three  sentences  will  excuse  this  statement  to  those  prag- 
matists  who  would  prefer  a  somewhat  different  formulation. 

1  I  am  indebted  for  suggestions  here  to  Professor  H.  W.  Stuart's  article 
on  "Valuation  as  a  Logical  Process,"  in  Dewey's  Studies  in  Logical  The- 
ory, pp.  322-23. 


THE  PHILOSOPHICAL  PRESUPPOSITIONS       69 

the  beginnings  of  life  on  our  planet.  And  then, 
we  are  born  into  the  same  society,  and  it  has 
given  us,  not,  to  be  sure,  tbe^power  of  reaction, 
but  certainly  all  of  our  most  important  stimuli.1 
Further,  we  do  get  along  in  society.  We  laugh 
together,  we  play  together,  we  share  each  other's 
sorrows,  we  love  and  hate  each  other,  in  a  way 
that  would  be  wholly  impossible  if  we  did  not  in 
practice  assume  the  correctness  of  our  "infer- 
ences" about  one  another's  motives  and  desires. 
And  the  fact  that  these  "  inferences "  are  in  the 
main  correct  is  the  one  thing  that  makes  social 
life  possible.  We  can,  and  do,  understand  one 
another's  motives,  desires,  wants,  emotions.  We 
can,  and  do,  constantly  communicate  our  feelings 
to  one  another. 

It  is  only  on  the  basis,  further,  of  an  intellec- 
tualistic  psychology  that  such  a  sub jectivistic  con- 
ception is  possible.  If  the  voluntaristic  psycho- 
logy and  the  doctrine  of  "the  unconscious"  be 
accepted  —  and  certainly  the  psychological  facts 
on  which  the  latter  is  based  must  be  accepted, 
whether  the  metaphysical  conclusions  are  or  not 2 
—  we  have  no  basis  whatever  for  this  doctrine  that 
clearness  holds  within  the  mind,  but  that  without 
all  is  uncertain.  Really,  only  a  little  part  of  our 
mental  life  is  in  consciousness  at  any  given  mo- 
ment. The  "stream  of  consciousness"  is  but  a 
narrow  thing,  and  the  unity  of  the  individual 

1  Cf.  Baldwin,  Social  and  Ethical  Interpretations,  passim,  and  Cooley, 
Human  Nature  and  the  Social  Order,  passim. 

2  The  most  interesting  discussion  of  these  topics  I  know  is  that  of  Fried- 
rich  Paulsen,  in  his  Introduction  to  Philosophy  (translated  by  Professor 
Frank  Thilly). 


70  SOCIAL  VALUE  T 

mind  is  a  unity,  not  of  consciousness,  but  of  func- 
tion. As  Goethe  somewhere  says,  we  know  our- 
selves never  by  reflection,  but  by  action.  And 
often  does  it  happen  that  a  sympathetic  friend, 
or  even  an  observant  enemy,  may  interpret  more 
accurately  our  actions  than  we  ourselves  can  do, 
and  may  measure  more  accurately  the  strength 
of  a  given  motive  for  us  than  we  can  ourselves. 
In  a  certain  sense,  our  knowledge  of  other  minds 
is  inference.  We  see  other  men's  actions,  or  hear 
their  voices,  or  watch  the  muscles  of  their  faces, 
and  so,  indirectly,  get  at  their  thoughts  and  feel- 
ings. But,  in  much  the  same  sense,  our  know- 
ledge of  their  actions,  or  of  their  voices,  is  infer- 
ence too.  For  we  must  interpret  the  image  on 
the  retina,  or  the  sense  excitation  in  the  ear.  But 
practically,  neither  is  inference,  if  by  inference 
be  meant  a  consciously  made  judgment  from 
premises  of  which  we  are  conscious.  In  a  casual 
walk  with  a  friend,  where  conversation  flows 
smoothly  on  easy  topics,  one  is  as  immediately 
conscious  of  his  friend's  thoughts  and  feelings, 
expressed  in  the  conversation,  as  he  is  of  the 
scenes  that  present  themselves  by  the  way,  or 
even  of  the  thoughts  that  arise  within  himself.1 

The  significance  of  this  conclusion  is  not  quite 
the  same  as  that  which  might  be  expected  from 
the  context  from  which  I  have  taken  the  doc- 
trine under  criticism.  The  feelings  of  men  with 
reference  to  economic  goods  are  facts  of  definite, 

1  Cf.  Perry,  R.  B.,  "The  Hiddenness  of  the  Mind,"  Jour,  of  Phil.,  Psy., 
and  Sci.  Meth.,  Jan.  21, 1909;  "The  Mind  Within  and  the  Mind  Without," 
Ibid.,  April  1, 1909  ;  "The  Mind's  Familiarity  with  Itself,"  Ibid.,  March  4, 
1909.  Urban,  W.  M.,  Valuation,  p.  243. 


THE  PHILOSOPHICAL  PRESUPPOSITIONS        71 

tangible  nature,  and  subject-matter  of  social 
knowledge.  But  we  have  not  yet  reached  a  stand- 
ard or  source  of  social  value.  No  homogeneous 
"labor  jelly,"  or  "pain  jelly,"  or  "utility  jelly," * 
made  up  by  averaging  arithmetically,  or  adding 
arithmetically,  individual  efforts  or  pains  or  plea- 
sures, will  solve  our  problem  for  us  —  as  indeed  I 
have  been  at  pains  to  show  in  what  has  gone  be- 
fore. The  purpose  of  the  foregoing  criticism  is  pri- 
marily to  clear  the  ground  for  a  conception  of  so- 
cial organization  which  is  more  than  mechanical, 
and  in  which  the  individual  is  both  less  and  more 
than  a  self-sufficient  monad. 

1  Davenport,  op.  cit.,  p.  331. 


CHAPTER  IX 

THE  SOCIOLOGICAL  PRESUPPOSITIONS 

CONCEPTIONS  of  the  social  unity  fall,  in  the  main, 
into  three  classes:  the  mechanical,  the  biological, 
and  the  psychological.  Each  of  these  concep- 
tions recognizes,  of  course,  that  the  individual 
has  a  mind,  but  the  first  thinks  of  that  mind  as  so 
shut  in  that  the  only  connections  between  men 
must  be  of  an  external  sort;  the  second  sees 
modes  of  collective  action  analogous  to  the  modes 
of  individual  action,  and  reaches  the  conception 
of  a  social  mind  by  analogy;  while  the  third  treats 
the  social  mind  as  an  empirical  fact,  the  pheno- 
mena of  which  can  be  studied  as  concrete  things 
in  detail.  And  there  are  gradations  here,  and  com- 
binations. 

The  following  extract,  freely  translated  and 
substantially  abridged,  is  taken  from  chapter  I  of 
DeGreef 's  Introduction  a  la  Sociologie:  — 

It  is  in  vain  that  Spencer  protests  against  the  accusa- 
tion that  he  has  assimilated  the  laws  of  biology  with  those 
of  sociology.  The  confusion  is  everywhere  complete.  He 
has  not  indicated  a  single  law,  nor  a  single  phenomenon, 
which  has  not  its  correspondent,  if  not  its  equivalent,  in  the 
antecedent  sciences.  Draper,  in  his  History  of  the  Intel- 
lectual Development  of  Europe,  adopts  precisely  the  doctrine 
that  the  laws  of  biology  apply  equally  to  sociology.  Man 
is  the  archetype  of  society.  Nations  pass  through  their 
periods  of  infancy,  adolescence,  maturity,  age,  death.  This 


THE  SOCIOLOGICAL  PRESUPPOSITIONS         73 

sort  of  thing  makes  sociology  wholly  unnecessary.  The 
attempt  of  Stanley  Jevons  to  explain  economic  crises  by 
sun-spots,  so  far  from  being  an  effort  of  genius,  is  simply 
a  jeu  (T esprit.  It  is  simply  a  recognition  of  the  common  fact 
that  climate  is  one  of  the  factors  that  influence  man  in 
society.  According  to  Hesiod,  physical  forces  first  engender 
each  other,  then  in  turn  the  gods  and  man.  Since  then, 
social  science  has  in  turn  been  founded  on  the  laws  of 
astronomy,  chemistry  and  biology.  To-day  it  is  the  last, 
vitiated,  further,  by  false  psychological  notions  about  the 
power  and  unlimited  liberty  of  the  reason,  and  the  con- 
sciousness of  human  individuals,  and  applied  by  analogy 
to  the  collective  reason. 

The  error  consists  in  looking  for  the  explanation  of  social 
phenomena  in  the  most  general  laws.  This  is  natural 
within  certain  limits,  but  has  been  pushed  to  extreme,  but 
logical  consequences,  by  the  American,  Carey  (Social 
Science).  He  looks,  in  effect,  to  one  of  the  oldest  sciences, 
and  one,  consequently,  relating  to  the  most  highly  general 
phenomena,  those  of  astronomy,  for  the  universal  laws  of 
society.  Geometry,  he  holds,  gives  us  principles  equally 
valid  for  the  chemist,  the  sociologist,  and  for  him  who 
measures  the  earth.  A  system  assuming  to  explain  complex 
phenomena  solely  by  the  laws  of  phenomena  more  simple, 
may  be  compared  to  the  effort  to  give  an  account  of  a  book, 
not  by  reading  it  line  by  line,  but  by  examining  the  cover 
and  the  title-page. 

As  DeGreef  elsewhere  puts  it,  there  is  a  hier- 
archy in  science,  proceeding  from  the  more  gen- 
eral to  the  less  general,  depending  on  the  nature 
of  the  phenomena  studied.  This  hierarchy  has 
been  variously  stated.  Comte  puts  it  thus:  math- 
ematics, astronomy,  physics,  chemistry,  physio- 
logy, social  physics  (sociology).  Baldwin,1  writ- 
ing much  later,  of  course,  puts  it  thus:  — 

1  Baldwin,  Mark,  Social  and  Ethical  Interpretations,  1906  ed.r  pp.  8-9. 


74  SOCIAL  VALUE 

So  here,  as  elsewhere,  there  is  a  gradation,  a  hierarchy, 
in  science:  chemistry  necessary  to  life,  but  not  itself  of  life; 
forces  in  the  environment  necessary  to  evolution,  but  not 
themselves  vital;  life-processes  necessary  to  consciousness, 
but  not  themselves  mental;  consciousness  necessary  to 
society,  but  not  all  consciousness  social;  social  conscious- 
ness necessary  to  social  organization,  but  not  all  social 
consciousness  actually  in  a  social  organization. 

Now  the  point  with  DeGreef  is  that  the  special 
laws  of  each  successively  narrower  group  of  phe- 
nomena are  to  be  explained  only  by  concrete 
study,  and  that  it  is  wholly  vain  to  think  that 
the  application  of  principles  drawn  from  other, 
more  general  groups  of  phenomena  give  us  these 
laws.  Thus  the  economists  talk  of  "equilibria" 
between  various  economic  forces,  just  as  if  they 
were  physical  forces;1  and  a  whole  school  of 
mathematical  economists  has  arisen,  who  find 
economic  life  a  thing  that  will  fit  into  equations. 
This  work  is  valuable,  but  it  is  not  final.  Analo- 
gies are  helpful,  but  are  not  ultimate.  Similarly, 
the  biological  conception,  which  likens  society 
to  a  man,  has  its  contributions.  The  biological 
analogy  has  been  pushed  very  far:  thus  Novikow 
calls  the  social  intellectual  elite  the  social  sen- 
sorium;  Lilienfeld  likens  the  action  of  a  mob 
to  female  hysterics;  Simiand  calls  the  idle  rich 
the  adipose  tissue  of  society,  the  priests  also 
represent  fat,  while  the  police  are  the  social 
phagocytes  which  eat  up  wandering  criminal 
cells.2  But  this,  though  suggestive,  is  not  an 
ultimate  social  philosophy  or  even  an  approach 

1  Cf.  John  Stuart  Mill's  Logic,  book  vi,  on  the  nature  of  social  laws. 
,*  Cited  by  Baldwin,  op.  cit.,  p.  495,  n. 


THE  SOCIOLOGICAL  PRESUPPOSITIONS         75 

to  it.  Even  DeGreef,  as  I  shall  indicate  a  little 
later,  errs  by  trying  to  trace  a  too  rigid  parallel 
between  individual  structure  and  social  struc- 
ture. We  must  introduce  a  careful  study  of  the 
peculiarly  social  phenomena,  those  phenomena 
which  are  to  be  found  only  in  society,  before  we 
are  privileged  to  talk  of  a  social  organism  or  a 
social  mind.1 

On  the  other  hand,  it  seems  to  me  that  Baldwin 
has  erred  in  the  opposite  direction.  The  laws  of 
chemistry  do  not  cease  to  be  operative  in  the  hu- 
man body,  even  though  more  complex  biological 
laws  operate  there.  And  the  laws  of  biology  are 
not  suspended  just  because  an  animal  organism 
develops  a  mind.  The  greatest  (defect  of  the  older 
psychology,  against  which  the  experimental  psy- 
chology is  a  reaction,  was  its  failure  to  take  pro- 
per account  of  physical  processes  connected  with 
consciousness.  Now  society,  according  to  Bald- 
win, is  best  described  as  analogous  to  a  psycho- 
logical organization,  and  such  an  organization  as 
is  found  in  the  individual  in  ideal  thinking.2  But 
surely  this  is  an  abstraction,  and  not  a  fact.  So- 
ciety does  not  cease  to  be  physical,  chemical,  bio- 
logical, subconscious,  merely  because  it  has  also 
attained  in  part  a  higher  form  of  psychical  activ- 
ity (to  which  Professor  Baldwin  would  object  on 
the  basis  of  his  distinction  between  the  "social" 
and  the  "socionomic"). 

DeGreef's  conception  seems  to  me  better,  on 
this  logical  point,  —  though  of  course  Baldwin's 

1  See  Giddings,  Principles  of  Sociology,  1905  ed.,  p.  194. 
x»  Op.  tit.,  p.  571. 


76  SOCIAL  VALUE 

analysis  of  facts  represents  a  great  advance  — 
but  it  is  not  satisfactory : 1  — 

Since  unconsciousness,  instinct,  and  reflex  action  char- 
acterize the  psychic  life  of  inferior  beings,  and  even  the 
greater  part  of  the  intellectual  activity  of  those  most 
highly  developed,  man  included,  we  ought  not  to  be  aston- 
ished, a  priori,  that  the  collective  force  which  constitutes 
the  social  superorganism  presents  the  same  characteristics. 

Consciousness  is  aroused  in  the  individual,  and  new 
activities  result,  which  soon,  however,  lose  their  conscious 
character,  and  become  reflex  and  automatic.  So  with 
society. 

Then  follows  an  elaborate  analogy  between  the 
individual  brain  and  nervous  system  and  their 
functions,  and  the  social  structure  and  its  func- 
tions, which  we  need  not  reproduce  here.  This 
analogy  seems  forced  to  me.  There  is  little  point 
to  trying  to  find  such  exact  correspondences.  It  is 
enough  if  we  have  our  general  organic  principle 
as  a  method  of  study,  and  then  proceed  to  the 
study  of  social  facts.  I  shall  myself,  however, 
make  use  of  some  analogies  in  what  follows,  but 
shall  not  insist  too  strongly  upon  them.  I  may 
here  express  the  opinion  that  society  is  an  organ- 
ism less  highly  developed  than  a  man's  body  or  a 
man's  mind,  and  that  its  unity  is  primarily  a  unity 
of  function  rather  than  of  structure,2  though  there 
is  some  structural  unity. 

The  conception  of  the  social  unity  which  seems 
most  useful  for  the  purpose  of  our  study  —  and 
the  writer  would  insist  that  no  social  theory  is 

1  Op.  cit.,  chap.  xm. 

1  Cf.  Elwood,  C.  A.,  Some  Prolegomena  to  Social  Psychology,  Chicago, 
1901.  Cf.  infra  in  this  chapter  the  note  on  Professor  Elwood's  view. 


THE  SOCIOLOGICAL  PRESUPPOSITIONS         77 

valid  for  all  purposes,  and  that  many  social  the- 
ories have  value  for  some  particular  purposes  — 
is  that  of  Professor  C.  H.  Cooley,  as  set  forth,  par- 
ticularly, in  the  opening  chapters  of  his  Social 
Organization.  As  this  book,  however,  presup- 
poses certain  doctrines  set  forth  in  Professor 
Cooley 's  earlier  book,  Human  Nature  and  the  So- 
cial Order,  a  brief  account  of  certain  points  in 
that  study  must  also  be  given.  It  may  be  noted, 
at  the  outset,  that  Professor  Cooley  neglects  the 
study  of  the  material  aspects  of  society,  and  cen- 
tres his  attention  upon  the  mental  side.  His  pur- 
pose in  this  is  not  to  deny  the  significance  of  the 
material  factors,  as  he  explains  in  the  preface  to 
Social  Organization,  but  simply  to  narrow  the 
scope  of  his  labors.  The  writer  wishes  here  to 
make  a  similar  statement  regarding  his  own  view- 
point. In  the  following  pages,  attention  will  be 
centred  almost  exclusively  upon  the  psychical 
forces  involved,  upon  what  we  shall  call  the  "so- 
cial mind."  In  this,  however,  it  is  explicitly  rec- 
ognized that  the  physical  environment  and  the 
biological  individuals  are  essential  factors,  and 
that  the  forces  which  are  manifested  in  them 
must  be  recognized  as  coefficients  with  the  psy- 
chical forces  which  we  shall  study,  in  the  deter- 
mination of  any  concrete  social  situation.  I 
have  no  intention  whatever  of  giving  an  inde- 
pendent, ontological  character  to  this  psychical 
abstraction.  For  the  purposes  of  this  study  we 
shall  regard  the  physical  factors  as  constant,  — 
an  assumption  justified  for  purposes  of  study, 
provided  we  subsequently,  in  handling  concrete 


78  SOCIAL  VALUE 

problems,  make  allowance  for  the  extent  to  which 
it  is  untrue. 

In  his  earlier  book,1  Professor  Cooley  objects 
to  the  customary  antithesis  between  "individual" 
and  "social."  They  are  simply  two  aspects  of 
the  same  thing.  He  discriminates  three  mean- 
ings of  the  word,  social,  none  of  which,  he  says, 
is  properly  to  be  contrasted  with  "individual": 
(1)  that  pertaining  to  the  collective  aspect  of  hu- 
manity, in  its  widest  and  vaguest  meaning;  (2) 
that  pertaining  to  immediate  intercourse;  (3)  con- 
ducive to  collective  welfare,  and  so  nearly  equiv- 
alent to  moral.  But  none  of  these  meanings  has 
"individual"  as  its  natural  or  logical  antithesis. 

There  are  several  forms  of  individualistic  views : 
(1)  Mere  Individualism.  The  distributive  phase 
of  human  life  is  almost  exclusively  regarded. 
Each  person  is  thought  of  as  a  separate  agent;  all 
social  phenomena  originate  in  the  action  of  such 
agents.  This  view  is  much  discredited  by  evolu- 
tionary science  and  philosophy,  but  is  by  no 
means  abandoned  even  in  theory,  and  practically 
it  enters  as  a  premise  into  most  common  thought 
of  the  day.  (2)  Double  Causation,  —  a  partition 
of  power  between  society  and  the  individual, 
both  thought  of  as  separate  causes.  This  is  ordi- 
narily the  view  met  with  in  social  and  ethical  dis- 
cussions. There  is  here  the  same  premise  of  the 
individual  as  a  separate,  unrelated  agent;  but 
over  against  him  is  set  a  vaguely  conceived  collec- 
tive interest  or  force.  People  are  so  accustomed 
to  think  of  themselves  as  uncaused  causes,  special 

^  Human  Nature,  etc.,  chap.  L_ 


THE  SOCIOLOGICAL  PRESUPPOSITIONS         79 

creators  on  a  small  scale,  that  when  general  phe- 
nomena are  forced  on  their  notice,  they  think  of 
them  as  something  additional,  and  more  or  less 
antithetical.  The  correction  of  this  error  will 
leave  the  contest  between  individualism  and  so- 
cialism, considered  as  philosophical  notions, 
rather  than  as  names  for  social  programs,  among 
the  forgotten  debris  of  speculation.  (3)  The 
third  view  he  calls  Primitive  Individualism.  The 
individual  is  prior  in  time  to  society.  This  view 
is  a  variety  of  the  preceding,  perhaps  formed  by 
mingling  individualistic  preconceptions  with  a 
rather  crude  evolutionary  philosophy.  Individ- 
uality is  lower  in  rank  as  well  as  prior  in  time.  The 
social  is  the  good,  moral,  and  the  individual  is 
the  anti-social  and  bad.  Professor  Cooley's  view 
is  that  individuality  is  neither  prior  in  time,  nor 
inferior  in  rank,  to  sociality.  If  social  be  ap- 
plied only  to  the  higher  forms  of  mental  life,  it 
should  be  opposed,  not  to  individual,  but  to  ani- 
mal or  sensual,  or  the  like.  Our  remote  ancestors 
were  just  as  inferior  when  viewed  separately  as 
when  viewed  collectively.  (4)  The  fourth  form 
of  individualism  he  calls  the  Social  Faculty  view. 
The  social  includes  only  a  part,  and  often  a  rather 
definite  part,  of  the  individual.  Individual  and 
social  are  two  different  parts  of  human  nature. 
Love  is  social;  fear  and  anger  are  unsocial  and  in- 
dividualistic. Some  writers  have  treated  intelli- 
gence as  an  individualistic  faculty,  and  have 
founded  sociality  on  some  form  of  sentiment. 
This  is  well  enough  if  we  use  social  in  the  second 
sense  of  pertaining  to  immediate  conversation, 


80  SOCIAL  VALUE 

or  fellow  feeling.  But  that  these  sociable  emotions 
are  essentially  higher,  or  pertain  peculiarly  to  col- 
lective life,  is  very  doubtful.  Cooley  holds  that 
no  such  division  of  human  nature  is  possible.  So- 
cial or  moral  progress  consists  less  in  the  aggran- 
dizement of  certain  faculties  and  suppression  of 
others,  than  in  the  discipline  of  all  with  reference 
to  a  progressive  organization  of  life. 

The  rest  of  the  book  is  devoted  to  a  study  of 
society  in  its  distributive  aspect,  or  as  we  should 
say  ordinarily,  using  the  terms  which  Professor 
Cooley  objects  to,  the  study  of  the  social  nature 
of  individuals.  It  is  based  in  large  measure  upon 
a  study  of  the  development  of  children.  Person- 
ality is  an  essentially  social  thing.  The  "I"  feel- 
ing is  a  thing  which  only  social  influences  can 
develop.1  The  thought  process  within  the  "indi- 
vidual mind"  is  a  social  process,  —  we  think  in 
words,  and,  indeed,  in  conversations.2  I  shall  not 
develop  these  notions  at  length.  They  are  of  simi- 
lar nature  to  those  in  Professor  Baldwin's  Social 
and  Ethical  Interpretations,  when  he  discusses  the 
"dialectic  of  personal  growth."  They  are  inter- 
esting and  pertinent  as  showing  in  a  concrete 
way  the  tremendous  and  comprehensive  sweep  of 
social  factors  in  the  creation  of  the  individual 
mind. 

Social  Organization,  which  appeared  in  1909, 
takes  up  the  collective  aspect  of  human-mental 
life. 

Mind  is  an  organic  whole,  made  up  of  cooperating  indi- 
vidualities, in  somewhat  the  same  way  that  the  music  of  an 

1  Op.  cit.,  chaps,  v  and  vi.  •  Ibid.,  pp.  52  et  seq. 


THE  SOCIOLOGICAL  PRESUPPOSITIONS        81 

orchestra  is  made  up  of  divergent  but  related  sounds.1  No 
one  would  think  it  necessary  or  reasonable  to  divide  the 
music  into  two  kinds,  that  made  by  the  whole,  and  that  of 
the  particular  instruments,  and  no  more  are  there  two  kinds 
of  mind,  the  social  mind  and  the  individual  mind.  The  view 
that  all  mind  acts  together  in  a  vital  whole  from  which  that 
of  the  individual  is  never  really  separate,  flows  naturally 
from  our  growing  knowledge  of  heredity  and  suggestion, 
which  makes  it  increasingly  clear  that  every  thought  we 
have  is  linked  with  the  thought  of  our  ancestors  and  asso- 
ciates, and  through  them  with  that  of  society  at  large.  It 
is  also  the  only  view  consistent  with  the  general  standpoint 
of  modern  science,  which  admits  nothing  isolate  in  nature. 
The  unity  of  the  social  mind  consists  not  in  agreement 
but  in  organization,  in  the  fact  of  reciprocal  influence  or 
causation  among  its  parts,  by  virtue  of  which  everything 
that  takes  place  in  it  is  connected  with  everything  else, 
and  so  is  an  outcome  of  the  whole.  Whether,  like  the  or- 
chestra, it  gives  forth  harmony  may  be  a  matter  of  dispute, 
but  that  its  sound,  pleasing  or  otherwise,  is  the  expression 
of  a  vital  cooperation,  cannot  well  be  denied.2 

Professor  Cooley  stresses  the  unconscious  char- 
acter of  many  of  these  social  relations.  "Al- 
though the  growth  of  social  consciousness  is  per- 
haps the  greatest  fact  of  history,  it  has  still  but  a 
narrow  and  fallible  grasp  of  human  life."  Cooley 
objects  to  the  Cartesian  postulate,  which  makes 
"cogito"  "I  think,"  the  fundamental  and  most 
absolutely  certain  fact  in  the  world.  He  holds 
that  it  grows  out  of  the  idiosyncrasy  of  a  highly 
specialized,  introspective  philosopher's  mind, 
and  that,  for  the  normal  mind,  "cogitamus,"  "we 

1  This  analogy  is  unhappy,  if  pushed  very  far  —  like  most  analogies 
between  physics  and  psychics.  It  serves  as  a  useful  figure  of  speech,  how- 
ever, —  which  is  all  Professor  Cooley  designs  it  for. 

1  Social  Organization,  pp.  3-4. 


82  SOCIAL  VALUE 

think,"  is  just  as  obvious.1  The  "I"  feeling,  and 
the  "we"  feeling  are  differentiated  together  out 
of  the  inchoate  experience  of  the  child.  And  "I " 
and  "we"  are  alike  social  in  their  nature.  The 
self,  for  Professor  Cooley,  is  not  a  scholastic 
"soul-substance"  or  transcendental  ego,  but 
simply  a  relatively  differentiated  portion  of  the 
social  mind.  "'Social  organism*  using  the  term 
in  no  abstruse  sense,  but  merely  to  mean  a  vital 
unity  in  human  life,  is  a  fact  as  obvious  to  en- 
lightened common  sense  as  individuality."2 

I  pause  here  to  contrast  this  view  of  the  "so- 
cial mind"  with  that  of  some  other  writers,  of 
whom  I  may  take  Professor  Giddings  as  represen- 
tative. I  quote  from  page  134  of  the  1905  edi- 
tion of  Professor  Giddings'  Principles  of  Socio- 
logy :  — 

The  social  mind  is  the  phenomenon  of  many  individual 
minds  in  interaction,  so  playing  upon  one  another  that 
they  simultaneously  feel  the  same  sensation  or  emotion, 
arrive  at  one  judgment  and  perhaps  act  in  concert.  It  is, 
in  short,  the  mental  unity  of  many  individuals,  or  of  a 
crowd. 

The  social  mind  for  Professor  Giddings  is  thus 
made  to  depend  upon  an  identity  of  content  in 
many  individual  minds.  For  Professor  Cooley, 
it  is  an  organization  and  integration  of  many 
differentiated  and  divergent  minds,  in  a  comple- 
mentary activity.  Professor  Cooley's  concep- 
tion, thus,  takes  in  all  minds,  while  that  of  Pro- 
fessor Giddings  would  exclude  the  dissenters. 
Further,  Professor  Giddings  emphasizes  the  ele- 

._  *  Social  Organization,  pp.  6-9.  J  Ibid.,  p.  9. 


THE  SOCIOLOGICAL  PRESUPPOSITIONS        83 

merit  of  consciousness;  unconscious  processes  are 
included  by  Professor  Cooley,  whose  conception 
really  finds  a  place  for  the  total  psychosis  of  every 
individual  in  society.  It  may  be  noted,  however, 
that  Professor  Giddings,  in  the  more  detailed  ex- 
position of  the  classroom,  does  not  stress  either 
the  agreement  or  the  consciousness  in  the  abso- 
lute fashion  that  the  brief  passage  quoted  would 
indicate,  and  readily  concedes  that  for  theoreti- 
cal purposes  the  more  inclusive  conception  of 
Professor  Cooley's  is  a  very  useful  one.  The  dif- 
ference between  his  viewpoint,  as  set  forth  in  the 
classroom,  and  that  of  Professor  Cooley,  is  pri- 
marily a  matter  of  emphasis.1 1 

The  following  propositions  are  submitted, 
partly  by  way  of  summary,  and  partly  by  way  of 
addition,  as  embodying  the  points  essential  for 
present  purposes  as  to  the  nature  of  society:  — 

(1)  Society  is  an  organism.  Organism  as  here 
used  is  a  generic  term,  with  the  following  conno- 
tation: (a)  an  organism  has  different  parts,  with 
different  functions;  (6)  these  parts  are  interde- 
pendent; (c)  an  organism  is  alive,  in  the  sense  in 
which  Spencer  defined  life,  that  is,  an  organism 
has  the  power  of  making  appropriate  inner  ad- 
justments to  the  external  environment;  (d)  an 
organism  has  a  central  theme,  not  externally  im- 
posed, to  the  working-out  of  which  the  differ- 
ent parts  contribute;  but  the  organism  —  or  the 

1  Compare  Professor  Giddings'  more  detailed  and  concrete  treatment 
of  the  subject  in  his  Readings  in  Descriptive  and  Historical  Sociology,  New 
York,  1906.  pp.  124-428.  , ' 


84  SOCIAL  VALUE 

parts  —  is  not  necessarily  conscious  of  this  cen- 
tral theme;  (e)  an  organism  is  constantly  chang- 
ing its  "matter"  without  essential  change  in 
"form."  (In  a  biological  organism  the  process 
of  metabolism  goes  on  constantly.  In  a  society, 
men  are  constantly  passing  out]of  society  through 
death,  or  through  lapsing  into  idiocy,  etc.,  and 
new  elements  are  constantly  entering,  not  through 
the  biological  process  of  birth,  but  through  the 
process  of  becoming  "socialized,"  in  the  manner 
described  by  Baldwin  as  the  "dialectic  of  per- 
sonal growth,"  or  by  Cooley,  in  his  Human 
Nature  and  the  Social  Order.)  (/)  An  organism 
grows,  by  progressive  differentiations  and  inte- 
grations. 

(2)  There  is  a  mind  of  society,  a  psychical  or- 
ganism. The  minds  of  different  individuals  — 
themselves  differentiated  into  systems  of  thoughts 
and  feelings  that  are  often  lacking  in  harmonious 
adjustment  to  each  other  —  are  in  such  intimate 
interrelation  that  they  may  be  said  to  constitute 
one  greater  mind.  The  physiological  basis  of  this 
greater  mind  —  if  it  be  thought  necessary  to  lo- 
cate it  —  is  the  brains  and  nervous  systems  of  in- 
dividual men,  plus  that  set  of  physical  symbols 
(e.g.,  language,  literature,  gestures,  art,  music, 
etc.)  which  are  set  in  motion  by  the  nerve  activity 
of  one  man,  and  then  stimulate  nerve  activity  on 
the  part  of  another.  This  unity  is  primarily  a 
unity  of  Junction,  however.1 

1  Professor  C.  A.  Elwood,  in  the  essay  mentioned  supra,  Some  Prolego- 
mena to  Social  Psychology,  is  the  first,  so  far  as  I  know,  to  apply  Professor 
Dewey's  psychological  viewpoint  to  the  study  of  the  social  mind.  Chap. 
ii  of  his  book  contains  a  very  excellent  brief  discussion  of  this  point.  With- 


THE  SOCIOLOGICAL  PRESUPPOSITIONS        85 

(3)  The  fact  of  individual  differences  among 
the  minds  of  men,  does  not  vitiate  the  concep- 
tion of  a  mind  of  society.  It  rather  proves  the 
organic  character  of  the  social  mind,  by  introduc- 
ing the  fact  of  differentiation.  The  integrating 
element  is  found  in  the  points  which  individual 
minds  have  in  common. 

(4)  The  mind  of  society,  like  the  mind  of  a 
man,  is  primarily  volitional,  and  not  intellectual. 
(Volition  is  here  used  in  the  wider  sense,  as  includ- 
ing all  motor  and  affective  activities  in  mind.) 
Like  the  individual  mind,  the  greater  part  of  it 
is  vaguely  conscious  or  subconscious. 

(5)  Less  highly  organized  than  the  individual 
mind,  the  mind  of  society  is  less  rational,  and  less 
highly  conscious,  than  most,  if  not  all,  individual 

out  going  into  the  matter  at  length,  it  must  suffice  to  say  here  that  the 
new  viewpoint  stresses  the  significance  of  mental  processes  for  activity, 
for  the  adjustment  of  the  organism  to  its  environment,  rather  than  the 
structure  or  content  of  the  mental  process.  It  stresses  impulse,  instinct, 
habit,  etc.,  and  refuses  to  undertake  a  synthetic  process,  which  strives 
to  get  some  sort  of  mechanical  unity  by  combining  abstract,  structural 
elements.  The  unifying  principle  in  mind  is  activity,  function.  Professor 
Elwood  holds  that,  while  the  individual  mind  has  unity  both  of  structure 
and  of  function,  the  social  mind  has  a  unity  of  function  only.  I  think  the 
contrast  is  not  so  sharp  as  that.  There  is  some  structural  unity  in  the  so- 
cial mind,  there  are  points  of  identity  among  individual  minds,  common 
ideals,  and  a  common  —  even  though  small  —  body  of  knowledge,  espe- 
cially in  very  elementary  matters.  And  the  unity  of  the  individual  mind 
is  primarily  a  unity  of  function.  Certainly  —  and  there  is  no  issue  with 
Professor  Elwood  here!  —  there  is  no  unifying  "soul-substance"  lying 
back  of  the  psychic  activities  organized  in  the  single  individual  mind. 
And  the  analogy  between  the  mind  of  an  individual  and  the  mind  of  soci- 
ety is  not  intended  to  read  into  the  social  mind  any  of  the  hypothetical 
character  which  an  abs9lutistic,  preevolutionary  metaphysics  ascribed 
to  the  individual  mind,  but  rather  —  in  so  far  as  the  issue  is  raised  at  all 
—  to  divest  the  individual  mind  of  just  that  hypothetical  character. 
Cf.  Friedrich  Paulsen's  Introduction  to  Philosophy,  on  "soul-substance," 
and  Wundt's  V'olker-Psychologie,  vol.  i,  chap.  I. 


86 .  SOCIAL  VALUE 

minds.   "Social  self -consciousness"  is  a  rare,  if 
not  non-existent  phenomenon. 

(6)  The  mind  of  society,  in  its  entirety,  is  of 
necessity  not  a  matter  of  perception  for  any  in- 
dividual.  Each  individual  sees  only  that  part 
which  is  in  his  own  mind  —  not  all  of  that !  — 
and  in  the  minds  of  other  individuals  with  whom 
he  is  in  communication. 

(7)  But  the  minds  of  other  men  may  be,  and 
normally  are,  in  part  objects  of  perception  for 
any  social  individual.  There  may  be  an  "infer- 
ential "  element  in  our  perception  of  mental  pro- 
cesses in  the  minds  of  other  men,  but  it  is  not 
inference. 

(8)  The  individual  monad  is   a  myth.  His 
machinery  of  thought  —  language  and  logic  — 
is  socially  given  him,  his  ideals  and  interests,  his 
tastes  even  in  matters  of  food  and  drink,  are  so- 
cially given,  —  apart  from  social  intercourse  his 
human-mental  life  would  be  mere  potentiality. 

(9)  The  worth  of  this  conception  of  social  re- 
ality, like  the  worth  of  other  scientific  hypotheses, 
is  to  be  determined  by  a  pragmatic  test:  does  it 
relate  phenomena  the  connection  between  which 
was    previously    obscure,    without    introducing 
greater  difficulties  of  its  own?  I  believe  that,  for 
the  problem  of  value  theory  at  least,  it  will  find 
such  a  pragmatic  justification. 

This  lengthy  excursion  into  a  field  not  com- 
monly counted  as  part  of  the  economist's  terri- 
tory is  to  be  justified  on  the  ground  that  the 
economist  has  not  only  failed  to  take  account 


THE  SOCIOLOGICAL  PRESUPPOSITIONS        87 

of  the  conclusions  reached  there,  but  has  also, 
too  often,  been  making  and  using  assumptions 
which  contradict  them.  It  is  further  necessary, 
because  the  conception  of  "social  value,"  which 
forms  the  subject  of  this  book,  assumes  a  "social 
organism  "  which  can  give  value  to  goods,  without 
making  it  clear  what  sort  of  an  organism  society 
is  conceived  to  be.  The  excursion  has  at  least 
revealed  some  of  the  many  meanings  that  lie  be- 
hind that  term.  And  it  is  especially  necessary  in 
view  of  the  fact  that  the  conception  of  "social 
value  "  has  been  attacked  on  the  ground  that  the 
organic  conception  has  been  abandoned  by  the 
sociologists  themselves.1  That  this  is  true  of  the 
biological  analogy,  which  made  society  an  ani- 
mal, and  drew  social  laws  from  biological  laws, 
rather  than  from  the  study  of  social  phenomena, 
is  readily  granted.  But  that  sociologists  have 
abandoned  the  generalized  conception  which 
gives  us  primarily  a  highly  convenient  schemat- 
ism on  which  to  group  the  social  facts  that  we 
actually  find,  is  by  no  means  conceded.  And  the 
question  is  really  one  as  to  those  facts  themselves 
rather  than  as  to  the  mode  of  grouping  and  con- 
ceiving them.  If  social  activity  be  nothing  more 
than  a  sum  of  similar  individual  activities,  as 
Professor  Davenport  seems  to  think  in  the  article 
criticizing  Professor  Seligman,2  and  if  the  individ- 

*  Davenport,  op.  cit.,  pp.  467-68. 

1  Op.  cit.,  pp.  445-46.  (The  reference  is  given  to  Professor  Davenport's 
book  for  the  convenience  of  the  reader.  The  original  article  appears  in  the 
Journal  of  Political  Economy  for  March,  1906.)  "Some  linguistic  uses 
connected  with  collective  nouns  will  offer  a  point  of  departure.  When 
thought  of  merely  as  indicating  an  aggregate,  a  unit,  the  collective  noun 


88  SOCIAL  VALUE 

ual  be  an  isolated  monad,  then  Professor  Daven- 
port's criticisms  will  hold.  But  if  the  individual 

takes  a  singular  verb;  if  regarded  as  a  collection  of  units,  it  takes  the 
plural  verb.  .  .  . 

"  Now,  in  many  cases,  though  the  act  or  the  situation  asserted  is  really 
one  of  each  individual  by  himself,  there  is  no  occasion  for  insisting  upon 
this;  no  ambiguity  or  inaccuracy  or  misapprehension  is  involved  in  saying 
that  'the  battalion  is  eating  its  dinner';  it  is  a  shorthand  fashion  of  speech, 
but  it  is  perfectly  intelligible;  it  is  common  enough  to  think  of  a  battalion 
as  a  unit,  and  the  act  of  dining  is  a  simple  one  in  which  all  join,  and  in 
which  all  comport  themselves  in  pretty  much  the  same  way;  from  the 
point  of  view  adopted,  the  interest  proceeded  upon,  the  purpose  in  hand, 
no  importance  attaches  to  the  fundamental  separateness  of  the  activities, 
and  to  their  entire  lack  either  of  psychical  unity  or  of  purposive  coopera- 
tion; they  are  simply  similar  —  roughly  simultaneous  —  and  are  thought 
of  in  block.  True,  one  man  eats  rapidly  and  another  slowly,  some  little 
and  others  much,  and  a  few  sick  ones  not  at  all;  but  the  expression  serves, 
and  implies  its  own  limitations  of  accuracy.  .  .  .  But  when  it  comes  to 
asserting  that  the  army  is  brushing  its  teeth,  or  has  stubbed  its  toe,  or 
has  a  stomach  ache,  there  is  obvious  difficulty.  These  things  are  not  done 
jointly,  cooperatively,  by  aggregates,  and  will  not  bear  thinking  over  into 
this  form. 

"And  so  we  may  speak  of  public  opinion,  the  preference,  or  habit,  or 
custom,  or  convention,  of  society;  and  no  harm  need  come  of  it,  despite 
the  fact  that  some  men  neither  think  nor  choose  in  the  manner  implied, 
but  have  their  own  peculiar  judgments  or  choices  or  wishes,  and  yet  are 
members  of  society,  entitled  to  be  included  in  any  exact  formulation; 
every  one  knows  that  the  thought  really  runs  upon  majorities  of  '  'most 
everybodies ' ;  that  is,  no  harm  need  come  of  it,  if  only  there  were  not 
people  to  take  the  notion  of  a  'social  mind'  seriously,  and  to  import  into 
cases  calling  for  accurate  analysis,  and  to  accept  as  sober  fact,  a  mere 
figure  of  speech,  or  at  best  a  loose  analogy  drawn  from  biological  science. 
For  to  the  biologist  and  the  sociologist  it  is  to  be  charged  —  or  credited  — 
that  the  society-as-an-organism  formula  has  found  its  way  into  economic 
thought.  And  thus  hereby  a  doctrine  long  since  abandoned  in  economic 
reasonings  is  in  the  way  of  reappearing;  for  have  we  not  need  of  normals 
and  averages?  Else  our  doctrine  in  getting  accurate  and  actual  will  get 
difficult  also.  And  so,  by  the  aid  of  the  sociologist,  through  the  magic  of 
the  society-as-an-organism  incantation,  a  resurrection  miracle  has  lately 
been  worked;  we  salute  the  average  man." 

Whether  any  serious  advocate  of  the  organic  conception  of  society  will 
recognize  in  this  caricature  the  doctrine  which  he  maintains  may  well  be 
doubted.  Certainly  it  would  never  occur  to  us  to  construct  an  organism 
by  averaging  its  organs !  Nor  do  we  try  to  get  a  social  mind  by  adding  a 
sum  of  similar  physical  activities,  or  even  similar  mental  activities.  An 
organism  is  a  functional  unity  of  different  and  complementary  parts. 


THE  SOCIOLOGICAL  PRESUPPOSITIONS        89 

is  in  vital  psychic  relation  with  other  individuals, 
so  much  so  that  he  is  impossible  apart  from  those 
relations,  and  if  social  activity  is,  not  a  sum  of 
similar  individual  activities,  but  an  integration 
and  organization  of  differentiated  and  complemen- 
tary individual  activities,  spiritual  as  well  as  phys- 
ical, then  Professor  Davenport's  criticisms  are 
not  valid.  And  it  is  on  this  point  that  I  would 
strongly  insist.  The  argument  of  the  following 
chapters  may  be  put  —  though  not  so  conven- 
iently —  in  terms  of  the  mechanical  analogy, 
and  the  psychical  processes  treated,  not  as  the 
action  of  a  unitary,  though  differentiated,  mind, 
but  as  a  balancing  and  transformation  of  forces, 
and  practically  the  same  results  for  value  theory 
will  follow. 


PART  IV 
A  POSITIVE  THEORY  OF  SOCIAL  VALUE 


CHAPTER  X 

VALUE  AS  GENERIC.  THE  PSYCHOLOGY  OF  VALUE 

WE  return,  then,  to  the  problem  of  the  'nature 
of  value.  Value  is  more  than  the  total  utility 
of  a  good,  or  the  marginal  utility  of  a  good,  to 
an  individual,  and  it  is  more  than  a  ratio  of  ex- 
change. Economic  value  is  a  species  of  the  genus 
value,  which  runs  through  other  social  sciences, 
as  ethics,  aesthetics,  jurisprudence,  etc.  Some- 
times these  various  values  are  so  intermingled 
that  it  is  impossible  to  tell  them  apart:  thus,  what 
kind  of  value  did  a  human  life  have  in  early  Ger- 
manic jurisprudence,  when  a  wergeld  was  accepted 
as  compensation  for  killing  a  man? 

Ethical  and  legal  values  we  recognize  as  some- 
thing very  different  from  the  feelings  of  single  in- 
dividuals, and  also  as  something  very  different 
from  abstract  ratios.  In  fact,  the  idea  of  quanti- 
tative ratios  in  connection  with  moral  values  is 
somewhat  startling  —  though  we  do  apply  the 
"times  judgment"  pretty  far,  and  say,  "he's 
twice  the  man  the  other  fellow  is,"  or  "this  is  n't 
half  as  bad  as  that."  But  we  do  not  go  into  re- 
finements, ordinarily,  and  try  to  make  the  ratios 
more  exact,  as  by  saying  that  the  value  of  this 
noble  deed  is  three  and  three  eighths  times  as 
great  as  that.  The  quantitative  measure  of  legal 
value  is  a  more  familiar  idea.  Thus,  a  man  gets 


94  SOCIAL  VALUE 

five  dollars  fine  for  a  plain  drunk,  and  twenty-five 
dollars  for  getting  drunk  and  "cussin*  around" 
(a  scale  of  "prices"  recently  established  in  the 
court  of  a  Missouri  Justice  of  the  Peace),  or  three 
years  in  the  penitentiary  for  one  crime,  and  ten 
years  for  another.  Here  we  have  quantitative 
measurements  of  values,  but  still  it  is  rather 
strange  to  our  thought  to  speak  of  a  ratio  of  ex- 
change between  them.  We  have  no  occasion  to 
exchange  them  ordinarily,  even  though  it  may 
happen  that  a  criminal,  in  contemplating  the 
chances  of  success  in  two  alternative  depreda- 
tions, will  weigh  the  penalties  to  which  he  would 
be  liable  in  the  two  cases  against  each  other;  and, 
indeed,  the  law  of  supply  and  demand  holds  here 
also  (though  inversely  applied,  for  we  are  deal- 
ing with  negative  values).  If  a  particular  crime 
(as  "Black-Handing")  increases  rapidly,  we  in- 
crease the  penalty  on  it  to  bring  it  to  a  stop.  But 
this  generalization  of  the  idea  of  value  ought  to 
make  clear  one  thing:  exchange,  at  least  in  its 
ordinary  meaning,1  is  not  the  essence  of  value. 
Exchange  is  a  factor  in  estimating  value  only  in 
economic  life.  And  even  there,  values  are  often 
estimated  without  actual  exchange,  and  the  art 
of  accountancy  has  arisen  for  that  purpose. 

An  exhaustive  study  of  this  generic  aspect  of 
value  lies,  of  course,  outside  the  scope  of  this 
book.  Ehrenfels,  Meinong,  and  others,2  have 

1  See  the  discussion  of  Simmel's  contention,  supra,  p.  19,  n. 

8  Ehrenfels,  C.,  System  der  Werttheorie,  Leipzig,  1897;  Kreibig,  J.  C., 
Psychologische  Grundlegung  eines  Systems  der  Werttheorie,  Vienna,  1902; 
Kallen,  H.  M.,  "Dr.  Montague  and  the  Pragmatic  Notion  of  Value," 
Jour,  of  Philosophy,  etc.,  Sept.,  1909;  Montague,  W.  P.,  "The  True, 


THE  PSYCHOLOGY  OF  VALUE  95 

made  fruitful  investigations  in  the  psychology  of 
value,  with  primary  reference  to  the  problems  of 
ethical  value,  while  Gabriel  Tarde,  approaching 
the  subject  with  a  sociological,  rather  than  psy- 
chological or  ethical  interest,  has  also  made  some 
illuminating  suggestions.  The  most  comprehen- 
sive work  in  English,  from  the  psychological  point 
of  view,  is  by  Professor  W.  M.  Urban,  whose 
Valuation  appeared  in  1909.  His  interest  is  also 
chiefly  in  ethical,  rather  than  economic,  value. 
Reference  has  been  made  in  an  earlier  footnote  * 
to  Simmel's  views.  There  is,  in  fact,  a  rich  litera- 
ture on  the  subject.  The  theory  of  economic 
value  to  be  developed  in  this  volume,  however,  is 
relatively  independent  of  many  of  the  theories 
treated  in  this  literature,  since,  as  will  appear 
later,  the  question  I  wish  to  raise  is,  not  so  much 
as  to  the  fundamental  nature  of  value,  in  its  psy- 
chological aspects,  but  rather,  as  to  what  individ- 
ual values  (and  in  what  relations)  are  significant 
for  the  explanation  of  the  particular  sort  of  value 

the  Good  and  the  Beautiful,  from  a  Pragmatic  Standpoint, "\Ibid.,  April  29, 
1909;  Meinong,  A.,  Psychologisch-ethische  Untersuchungen  zur  Werttheorie, 
Graz,  1894;  Paulsen,  Friedrich,  Introduction  to  Philosophy,  and  System  of 
Ethics;  Stuart,  H.  W.,  "The  Hedonistic  Interpretation  of  Subjective 
Value,"  Jour,  of  Pol.  Econ.,  vol.  iv,  "Valuation  as  a  Logical  Process,"  in 
Dewey's  Studies  in  Logical  Theory,  Chicago,  1903;  Shaw,  C.  C.f  "The 
Theory  of  Value,  and  its  Place  in  the  History  of  Ethics,"  International 
Jour,  of  Ethics,  vol.  xi;  Slater,  T., "  Value  in  Moral  Theology  and  Political 
Economy,"  Irish  Eccles.  Rec.,  ser.  4,  vol.  x,  Dublin,  1901;  Tufts,  J.  H., 
"Ethical  Value,"  Jour,  of  Philosophy,  etc.,  vol.  xix;  Baldwin's  Dictionary 
of  Philosophy,  etc.,  *.  v.  "Worth"  (article  by  W.  M.  Urban);  Simmel,  G., 
Philosophic  des  Geldes,  Leipzig,  1900,  "A  Chapter  in  the  Philosophy  of 
Value,"  Amer.  Jour,  of  Sociology,  vol.  v;  Urban,  W.  M.,  Valuation,  Lon- 
don, 1909.  These  titles  are  representative  of  an  extensive  literature  on 
the  subject. 
1  Supra,  p.  19,  n. 


96  SOCIAL  VALUE 

with  which  the  economist  is  concerned.  The  ex- 
position which  follows  will  be  clearer,  however, 
if  a  psychological  theory  of  value  be  premised, 
and  the  discussion  of  social  economic  value  will 
gain  from  a  consideration  of  ethical  and  other 
forms  of  value,  in  their  sociological  aspects,  as 
treated  by  some  of  the  writers  named.  The  rest 
of  this  chapter  will  be  concerned  with  the  prob- 
lem of  value  as  it  presents  itself  in  individual 
psychology,  and  later  chapters  will  treat  the 
problem  of  social  value. 

For  the  experience,  and  at  the  time  of  the  ex- 
perience, a  value  is  a  quality  of  the  object  valued.1 
Values  are  "tertiary  qualities"  (to  borrow  an  ex- 
pression from  Professor  Santayana's  Life  of  Rea- 
son2), just  as  real  and  objective  as  the  "primary" 
and  "secondary  "qualities.  We  speak  of  a  gloomy 
day,  or  a  fearful  sight,  and  the  gloom  is  a  quality 
of  the  day,  and  the  fearfulness  is  really  in  the  ob- 
ject —  for  the  experience.  When  we  have  suffi- 
ciently reflected  upon  the  situation  to  be  able  to 
separate  subject  and  object,  and  to  divest  the  ob- 
ject of  the  quality,  and  put  the  fear  in  ourselves, 
or  the  gloom  in  our  own  emotional  life,  then  the 
experience  is  already  past,  and  the  value,  as  the 
value  of  that  object,  has  ceased  to  be.  We  are  al- 
ready over  our  fear  when  we  can  separate  it  from 

1  I  am  indebted  to  Professor  John  Dewey  for  many  valuable  suggestions 
and  criticisms  in  connection  with  this  part  of  my  study.  My  more  general 
obligations  to  him  will  be  manifest  to  any  one  who  is  familiar  with  his 
epoch-marking  point  of  view.  Economic,  sociological  and  political  phi- 
losophy have,  in  my  judgment,  more  to  learn  from  him  than  from  any 
other  contemporary  philosopher. 

*Pp.  141-42. 


THE  PSYCHOLOGY  OF  VALUE  97 

the  object.  These  qualities  are  intensive  quali- 
ties, may  be  greater  or  less  in  degree,  i.e.,  are 
quantities.1  And  they  must  first  exist,  as  such 
quantities,  before  any  reflective  process  of  evalua- 
tion and  comparison  can  put  them  in  a  scale,  and 
make  clear  their  relative  values.2 

So  much  for  the  experience  as  an  immediate 
fact.  If  we  break  up  the  experience  analytically, 
however,  we  of  course  first  distinguish  subject 
and  object,  and  we  throw  the  "tertiary  quality," 
of  value,  over  to  the  side  of  the  subject.  It  is 
a  phase  of  the  subject's  emotional  life.  In  this 
analytical  process  we  necessarily  make  abstrac- 
tions, —  the  elements  with  which  we  finally  come 
out,  put  together  in  a  synthesis,  will  not  give  us 
our  concrete  experienced  value  again.  But,  recog- 
nizing this,  we  may  still  distinguish  what  seem 
to  be  the  more  important  aspects  of  the  value  ex- 
perience, on  its  psychological  side,  and  set  forth 
the  criteria  by  which  a  value  is  to  be  recognized. 
First  of  all,  then,  value  has  its  roots  in  .the. emo- 
tional-volitional,  side  of  mind.  A  pure  intellect, 
if  we  may  imagine  it,  would  understand  logical 
necessity,  would  contemplate  the  "world  of  de- 
scription," but  could  know  nothing  of  the  "world 
of  appreciation,"  or  of  values.3  (It  is  precisely 
because  intellect  is  never  "pure,"  because  it  al- 
ways has  its  emotional  accompaniment  and  pre- 
suppositions, that  we  can  objectively  communi- 
cate our  values,  as  urged  in  chapter  vm.)  But 

1  Cf.  Gabriel  Tarde,  Psychologic  ficonomique,  vol.  i,  p.  63,  and  Urban, 
Valuation,  p.  73. 
*  Urban,  op.  cit.,  p.  32.  *  Paulsen,  Friedrich,  Ethics,  passim. 


98  SOCIAL  VALUE 

what  phases  of  the  emotional-volitional  side  of 
mind  are  most  significant?  For  hedonism,  an 
abstract  element,  a  feeling,  a  pleasure  or  a  pain, 
is  the  essence  of  the  value, —  in  fact,  is  the  value. 
Critics  of  hedonism,  as  Ehrenfels  *  and  Professor 
Davenport,2  have  made  desire,  rather  than  feel- 
ing, the  worth-fundamental.  The  psychology 
lying  back  of  this  conception  represents  a  great 
advance  over  the  passive,  associationalistic,  ele- 
ment psychology  of  the  hedonists,  and  is  espe- 
cially significant  as  emphasizing  the  impulsive, 
dynamic  nature  of  value,  but  it  is  still  too  ab- 
tract,  —  indeed,  it  abstracts  from  a  very  funda- 
mental aspect  of  the  value  as  experienced,  namely, 
the  feeling  itself.  Moreover,  in  many  cases,  value 
may  be  great  with  desire  at  a  minimum,  else  we 
must  say  that  value  ceases  when  an  object  is  pos- 
sessed, and  desire  is  satisfied.  I  may  value  my 
friend  greatly,  may  be  vividly  conscious  of  that 
value,  and  yet,  because  he  is  my  friend,  because 
I  already  possess  him,  may  find  the  element  of 
desire  a  minor  phase  in  his  value,  even  if  it  be 
present  at  all.3  Hed_onism  abstracts  a  prominent 
and  important  phase  of  the  value  experience,  and 
while  it  errs  in  making  that  phase  the  whole  of 
the  experience,  and  while  it  has  sadly  misinter- 
preted that  phase  (for  feelings  of  value  cannot  be 
reduced  to  pleasure  and  pain  feelings),  still  we 
cannot  afford  to  disregard  it.  Just  because  the 
hedonistic  analysis  is  crude,  it  has  to  seize  on 
something  obvious.  If  we  must  choose  between 

1  System  der  Werttheorie,  vol.  i,  chap.  i.  *  Op.  cit.,  p.  311.] 

'  Cf.  Urban,  op.  cit.,  p.  36;  Meinong,  op.  cit.,  pp.  15-16. 


THE  PSYCHOLOGY  OF  VALUE  99 

feeling  and  desire  as  the  value-fundamental,  we 
must,  I  think,  with  Meinong  and  Urban,1  settle 
on  feeling  rather  than  desire.  Our  point  will  be, 
however,  to  protest  against  the  identification  of 
value  with  either  of  these,  and  to  distinguish 
both  of  them  as  moments,  or  phases,  in  value, 
and  value  itself  as  a  moment  or  phase  in  the  total 
psycjiosis.  Value  is  not  to  be  understood  apart 
from  what  Urban  calls  its  "presuppositions."2 
Every  value  presupposes  a  going  on  of  activity,  and 
is  intimately  linked  with  the  total  psychosis,  — a 
moving  focal  point  of  clear  consciousness,  with 
a  surrounding  area  of  vaguer  processes,  gradually 
shading  off  into  the  subconscious  and  uncon- 
scious at  the  borders.  Every  value  is  linked  with 
the  whole  body  of  ideas,  emotions,  habits,  in- 
stincts, impulses,  which,  in  their  organic Jx>tality, 
we  call  the  personality.  Back  of  the  value  stands 
a  long  history,  wnich  persists  into  the  present  in 
the  form  of  dispositions  and  activities,  of  which 
we  are  unconscious  so  long  as  they  are  unimpeded, 
but  which  spring  into  consciousness  at  once  if 
arrested.  If  the  object  be  one  that  appeals  to  sim- 
ple biological  impulses,  we  may,  as  a  rule,  safely 
abstract  from  most  of  these  "presuppositions," 
and  centre  attention  upon  the  biological  impulse 
and  its  accompanying  feelings  and  ideas.  But  as 
we  rise  to  objects  that  appeal  to  wider  and  higher 
interests,  the  essential  presuppositions  include 
more  and  more  till,  in  vital  ethical  values,  vir- 
tually the  whole  personality  is  essentially  in- 

1  Meinong,  op.  tit.,  pt.  i,  chap,  i;  Urban,  op.  cit.,  pp.  38-39. 
*  Op.  dt.,  pp.  14-16,  and  following  chapter. 


100  SOCIAL  VALUE 

volved.  Of  these  presuppositions,  or  "funded 
meaning,"  we  need  not  be  conscious  in  any  de- 
tail. The  value,  which  is  the  emotional-volitional 
aspect  of  this  funded  meaning,  is,  of  course,  suffi- 
cient, so  long  as  it  is  unchallenged  by  an  opposing 
value,  for  the  motivation  of  our  activity  —  which 
is  the  essential  function  of  values.  The  presup- 
positions tend  to  become  explicit  when  the  value 
is  challenged  by  another  value,  though  they  never 
come  entirely  into  light,  in  the  case  of  the  higher 
values,  and  to  make  them  even  approximately 
clear  is  the  work  of  long  conflict  in  an  introspec- 
tive mind.  A  frequent  result  of  conflicts  among 
values  is  a  sort  of  mechanical  "haul  and  strain," 
producing  "more  heat  than  light."  The  ques- 
tion of  the  relations  among  values  is  a  separate 
topic,  which  will  be  discussed  for  its  own  sake 
later.  We  are  here  interested  in  it  as  making 
clearer  the  nature  of  the  "presuppositions"  of 
value. 

Now  in  the  value,  as  has  been  said,  we  may  dis- 
tinguish both  desire  and  feeling.  The  feelings,  in 
Professor  Dewey's  phrase,  are  "absolutely  plu- 
ralistic" and  cannot  be  reduced  to  any  one  type, 
or  two  types,  as  pleasure  and  pain.  The  desjres 
may  be  either  intense  or  slight,  without  reference 
to  the  amount  of  the  value,  depending  on  circum- 
stances. As  stated,  if  we  have  the  object  we  value, 
the  element  of  desire  must  be  reduced  to  an  atti- 
tude, to  a  disposition  to  desire,  in  the  event  the 
object  should  be  lost.  It  remains  a  vague  back- 
ground of  concern,  of  "anxiety  lest  the  object  es- 
cape," capable,  of  course,  of  springing  into  full 


THE  PSYCHOLOGY  OF  VALUE  101 

intensity  if  need  be.  In  esthetic  values,  and  in 
the  values  of  mystical  repose,  we  have  cases  where 
desire  is,1  thus,  at  a  minimum.  Strictly  speaking, 
desire,  as  a  conscious  fact,  has  in  it  always  a  nega- 
tive aspect,  a  privative  aspect,  —  we  desire  wnen 
we  are  incomplete,  when  we  lack.  It  is  this  nega- 
tive aspect  of  desire  which  the  Greek  philosophers, 
as  Aristotle,  stressed,  and  which  has  led  abso- 
lute idealism  to  eliminate  desire  from  its  concep- 
tion of  the  Absolute  Spirit.  But  desire  has  also  a 
positive  or  active  aspect,  and  in  this  aspect  it  re- 
mains in  all  values.  Where  the  activity  is  per- 
fectly unjfted,  —  a  situation  which  we  sometimes 
approximate,— we  may  not  be  conscious  of  de- 
sire, even  though  intense  activity  is  going  on. 
Since,  however,  the  human  mind  is  rarely  in  this 
state,  and  never  completely  in  it,  we  may  hold 
that  desire,  in  its  privative  aspect,  is  always 
to  some  degree  present,  if  only  as  a  vague..jun- 
easiness.  And  as  a  disposition  to  activity,  if  the 
value  should  be  threatened,  desire  is  always 
present. 

Conversely,  desire  may  be  at  a  maximum,  and 
feeling  at  a  minimum.  If  we  do  not  possess 
the  object,  if  we  are  striving  for  it,  while  there 
may  be  and  doubtless  is  feeling  in  connection 
with  the  desire,  it  cannot,  obviously,  be  the  same 
feeling  that  we  would  experience  if  the  object 
were  present  and  quenching  the  desire.  Indeed, 
it  may  be  held  that  much  of  the  feeling-accom- 
paniment of  intense  desire  is  extraneous  to  the 
value-moment:  that  it  is,  in  fact,  kinsesthetic  feel- 

1  Urban,  op.  cit.,  p.  39. 


102  SOCIAL  VALUE 

ing,  due  to  the  stress  of  opposing  muscular  reac- 
tions, etc.  The  disposition  to  feel  is  there,  and, 
if  the  object  of  desire  be  one  that  is  familiar,  the 
mere  anticipation  of  it  may  call  up  traces  of 
the  feeling  that  its  presence  has  in  the  past  pro- 
duced and  will  produce  again.  But  the  feeling 
element  in  such  a  situation  is  a  minor  phase. 

Finally,  unless  we  mean  to  insist  that  all  the 
objects  which  one  values,  and  whose  values  moti- 
vate one's  conduct,  are  present  in  consciousness 
all  the  time,  we  must  recognize  that  neither  de- 
sire nor  feeling'need  be  actual,  present,  conscious 
facts,  for  the  value  to  be  effective.  It  may  hap- 
pen that  the  object  of  value  is  one  reserved  for 
later  use,  and  that  it  is  not  threatened.  In  such  a 
case  we  may  accord  its  value  intellectual  recog- 
nition, with  desire  and  feeling  both  at  a  mini- 
mum, and  that  recognition  may  serve  as  a  term 
in  a  logical  process  which  may  lead  to  a  practical 
conclusion  of  significance  for  action.  Or,  a  value 
may  form  part  of  the  unconscious  "presupposi- 
tion" of  another  value,  which  is  consciously  felt 
at  the  moment.  Mind  is  economical.  Conscious- 
ness is  not  wasted,  when  there  is  no  function  to 
be  served  by  it.  The  essential  thing  about  value 
is  that  it  motivate  our  conduct.  If  a  satisfactory 
set  of  habits  be  built  up  about  a  value,  it  may 
serve  this  purpose  perfectly,  without  coming  into 
consciousness  very  often.  But  both  desire  and 
feeling  must  be  potentially.J;here. 

A  further  element  is  necessary.  Meinong  in- 
sists upon  an  existential  judgment,  a  judgment 
that  the  object  valued  is  real,  as  essential  to 


THE  PSYCHOLOGY  OF  VALUE  103 

value.1  Gabriel  Tarde2  makes  a  similar  conten- 
tion, holding  that  belief,  as  well  as  desire,  is  in- 
volved in  value,  and  that  a  diminution  of  either 
means  a  lessening  of  the  value.  Urban's  opinion, 
which  seems  to  me  the  correct  one,  is  that  we 
need  not  and  cannot  go  so  far  as  this.3  In  many 
cases  such  judgments  are  explicit  and  the  value 
could  not  exist  if  the  object  were  explicitly  judged 
unreal.  But  the  mere  unconscious  assumption 
or  presumption  of  the  reality  of  the  object,  the 
mere  "reality-feeling,'*  is  sufficient,  —  as  is  ob- 
vious enough  from  the  fact  that  we  value  the 
objects  of  our  imagination.  We  shall  often  find, 
especially  in  the  field  of  the  social  values  to  which 
we  shall  shortly  turn,  that  Tarde's  contention  is 
highly  significant,  particularly  with  reference  to 
economic  values,  and  there,  particularly  in  the 
matter  of  credit  phenomena.4  But  explicit  affir- 
mation, even  there,  is  not  necessary,  provided 
the  question  of  reality  is  not  raised  at  all.  A  "re- 
ality-feeling," however,  is  essential.  It  should  be 
noticed,  too,  that  this  "reality-feeling"  is  an  es- 
sentially emotional,  rather  than  intellectual,  fact. 
It  is  the  emotional  "tang"  which  distinguishes 
belief  from  mere  ideation,  and,  if  it  be  present, 
the  ideation  and  explicit  judgment  may  be  dis- 
pensed with. 

In  the  value  experience,  as  a  conscious  experi- 
ence, and  from  the  structural  side,  we  may  distin- 

1  Psychologisch-ethische  Untersuchungen  zur  Werttheorie,  Graz,  1894, 
pt.  I,  chap,  i,  esp.  p.  21. 

*  "La  psychologic  en  Economic  politique,"  RevuelPhttosophique,  vol. 
xii,  pp.  337-38. 

1  Op.  cit.,  pp.  41  el  seq.  *  See  chapter  xvi,  infra. 


104  SOCIAL  VALUE 

guish  these  phases:  feeling,  desire,  and  the  reality- 
feeling,  each  present  at  least  to  a  minimal  degree. 
And  yet  it  seems  to  me  that  we  have  in  none  of 
these,  considered  as  phases  in  consciousness,,  the 
most  essential  aspect  of  value.  For  our  purposes 
the  structural  aspect  is  not  the  most  significant. 
The  functional  aspect  is  of  more  importance.  And 
the  function  of  values  is  the  function  of  motiva- 
tion. That  value  is  greatest  which  counts  for 
most  in  motivating  activity.  A  well-established 
and  unquestioned  value,  which  in  a  concrete 
situation  has  the  pas  over  all  the  others  con- 
cerned, has  little  need  to  awaken  the  emotional 
intensity  that  other,  less  certain,  values,  whose 
position  in  the  scale  is  as  yet  undetermined,  may 
require.  A  girl  is  arranging  a  dinner-party. 
Whom  shall  she  invite?  Well,  her  chum  of  course 
must  be  there.  No  question  arises.  There  is  no 
need  for  conscious  emotion.  One  or  two  others 
are  settled  upon  almost  as  readily,  and  with  as 
little  emotional  intensity.  But  now  comes  the 
problem  at  the  margin  I  For  eight  or  ten  others  are 
almost  equally  desirable,  and  there  are  only  six 
places.  The  lower  values,  compared  with  each 
other,  must  show  themselves  for  what  they  are, 
must  come  vividly  into  consciousness,  must  be 
felt  and  desired  in  order  that  they  may  be  com- 
pared,—  not  in  order  that  they  may  be!  From 
the  functional  side,  then,  the  testxxf  a  value  is  its 
influence  upon  activity.  The  "common  dejaomi- 
nator,"  or,  better,  the  abstract  essence,  of  values, 
is,  not  feeling,  nor  desire,  but  power  in  motiva- 
tion, and  the  expression  of  this  is  of  course  the 


THE  PSYCHOLOGY  OF  VALUE  105 

activity  itself.  The  functional  significance  of  the 
consciously  realized  desire  and  feeling  aspects  of 
values  comes  in  when  values  are  to  be  compared 
and  weighed  against  one  another,  and  —  a  phase 
that  was  stressed  in  a  preceding  section,  and  will 
again  be  adverted  to  shortly  —  when  values  are 
to  be  shared  consciously  by  different  individuals, 
when  they  are  to  be  communicated  and  dis- 
cussed, —  that  is  to  say,  are  to  become  objects  of 
a  group  consciousness. 

The  significant  thing  about  value,  then,  from 
this  functional  point  of  view  is  its  dynamic  qual- 
ity. Value  is  a,  force,  a  motivating  force.  But  now 
we  must  revert  to  our  original  point  of  view,  — 
the  total  situation.  We  have,  by  an  analytical 
process,  sundered  subject  and  object,  and  then, 
within  the  subject,  have  discriminated  phases 
which  psychological  analysis  reveals.  But  in  the 
course  of  activity,  these  elements  are  not  dis-  • 
criminated.  The  value  is,  not  in  the  subject,  but 
mjhe^object.  The  object  is  an  embodiment  of  the 
force.  It  has  power  over  us,  over  our  actions.  If 
the  object  be  a  person,  we  are  under  his  control 
—  to  the  extent  of  the  value.  If  the  object  be  a 
thing  controlled  by  another  person,  we  are  sub- 
ject to  his  control  —  to  the  extent  of  the  value. 
I  do  not  wish  to  be  understood  as  picking  out  this 
abstract  phase  of  value  as  the  whole  of  the  story, 
or  thinking  that  it  is  possible  for  value  to  exist  in 
this  abstract  form.  Qualities  are  nevez  separate. 
But  I  do  contend  that  this  is  the^essential  and 
universal  element  in  values,  and  that  for  an  indi- 
vidual engaged  in  the  active  conduct  of  life,  this 


106  SOCIAL  VALUE 

aspect  is  so  significant  that  it  may  often  be  the 
sole  feature  to  engage  his  attention  —  because  it 
is  the  sole  feature  that  need  engage  his  attention 
for  the  activity  to  go  on  in  harmony  with  his 
values.  Here,  then,  is  value  "stripped  for  rac- 
ing": a  quantity  of  motivating  force,  power  over 
the  actions  of  a  man,  embodied  in  an  object.  All 
the  other  phases,  in  the  course  of  the  active  expe- 
rience itself,  may  be  relegated  to  the  sphere  of  the 
implicit. 

A  necessary  limitation  has  been  definitely  indi- 
cated in  what  has  gone  before,  but,  to  avoid  mis- 
understanding, it  may  be  well  to  indicate  it  more 
explicitly.  Not  every  form  of  impulse  is  to  be 
counted  a  value.  Every  state  of  consciousness  is 
motor,  and  tends  to  pass  into  action,  even  vague, 
undefined  feelings,  and  half -conscious  fancies.  A 
value  must  have  its  organic  presuppositions,  as 
indicated  before,  and  must  be  embodied  in  an 
object.  The  objects  of  value  may  be  infinitely 
various :  they  may  be  economic  goods,  they  may 
be  persons,  they  may  be  activities,  they  may  be 
other  values,  they  may  be  ideal  objects,  the  crea- 
tures of  our  imaginations,  they  may  be  social 
Utopias  or  the  Kingdom  of  Heaven.  But  there 
must  be  an  object,  and  the  value  is  a  quality 
of  the  object.  But,  functionally;  the  essential 
thing  about  this  value  is  its  dynamic  character. 

Values  are  positive  and  negative.1  A  "fear- 
ful sight"  repels  us,  has  a  negative  value,  tends, 

1  The  German,  with  its  facility  in  compounding,  offers  a  convenient 
nomenclature  here:  Wert  and  TJnwert.  Cf.  Ehrenfels,  op.  eit.,  for  a  brief 
discussion  of  negative  values  (pp.  53-54). 


THE  PSYCHOLOGY  OF  VALUE  107 

to  the  extent  of  its  strength,  to  make  us  with- 
draw. A  bad  act,  an  ugly  woman,  a  cruel  man, — 
here  we  have  negative  values.  Little  need  be  said 
further  with  reference  to  this  point.  They  alike 
are  motivating  forces,  the  positive  values  at- 
tracting us,  the  negative  values  repelling  us. 

The  question  of  the  relations  among  values  we 
shall  discuss  rather  briefly,  not  that  it  is  unimpor- 
tant, but  that  much  of  it  is  familiar.  Values  may 
be  complementary — as  when  several  objects  are 
all  essential  to  one  another  if  any  of  them  are  to 
be  of  use.  Values  may  depend  on  other  values,  as 
the  value  of  the  means  depends  on  the  value  of 
the  end,  which  is  its  essential  "presupposition." 
Values  may  antagonize  each  other,  and  here  two 
cases  are  to  be  distinguished,  which  differ  so 
much  in  degree  that  the  difference  may  be  re- 
garded as  qualitative.  Values  may  be  in  their 
nature  quite  conjpatible,  so  that  nothing  in  their 
character  prevents  the  realization  of  both,  but 
there  may  not  be  room  enough  for  both,  owing  to 
the  limitation  of  our  resources, — as  when  the 
young  lady  of  our  illustration  had  only  six  seats 
at  her  dinner,  and  so  was  obliged  to  exclude  some 
of  her  friends.  But  the  values  may  be  qualita- 
tively incompatible.  We  may  be  unable  to  realize 
them  both  because  the  one  involves  a  different 
sort  of  self  from  the  self  that  could  realize  the 
other.  This  is  the  typical  case  in  ethical_yalues, 
where  the  presuppositions,  especially  in  ethical 
crises,  involve  the  whole  personality.  In  case  of 
such  conflicts,  say  between  the  value  of  Sabbath 
observance  and  the  allurement  of  Sunday  base- 


108  SOCIAL  VALUE 

ball  in  the  case  of  an  orthodox  "fan,"  we  may 
have,  as  before  indicated,  a  mere  mechanical  haul 
and  stress,  in  which  one  or  the  other  wins  by 
sheer  force,  to  the  very  considerable  discomfort 
of  the  uneasy  victim.  But  the  conflict  may  lead 
to  a  reexamination  of  the  presuppositions  of  each 
value,  to  a  process  of  bringing  each  into  more 
organic  relation  to  the  whole  system  of  values. 
In  this  process,  other  values  may  be  called  into 
play,  may  reenforce  one  or  the  other  of  the  two 
alternative  values.  And,  after  such  a  process, 
both  values  may  be  different  from  what  they 
were.  There  may  emerge  some  higher  value 
which  comprehends  them  both,  or  one  may  be 
reduced  to  a  minor  place,  and  the  other  may 
prevail.  Values  are  no  more  permanent  than  any 
other  phase  of  the  mental  life.  Constant  trans- 
formations, even  though  not  always  fundamental 
transformations,  take  place. 

There  is  another  case  which  is  so  familiar  to 
economists  that  it  need  merely  be  adverted  to. 
Where  objects  of  value  are  indivisible,  we  must 
take  one  or  the  other,  if  there  be  a  conflict.  But, 
in  the  case  of  qualitatively  compatible  objects,  a 
different  situation  is  the  rule.  We  may  have  part 
of  one,  and  part  of  the  other,  and  the  question 
arises  as  to  how  much  of  each.  Here  the  Austrian 
analysis  gives  us  an  answer,  which,  when  we  gen- 
eralize it,  despite  its  antiquated  psychology,  may 
be  accepted  with  little  modification.1  The  la,w_of 
"diminishing  utility"  as  we  increase  the  incre- 

1  For  this  generalization,  see  Urban,  op.  dt.,  chap,  vi ;  Ehrenfels,  op. 
cii.,  vol.  n,  chap,  in,  esp.  p.  86. 


THE  PSYCHOLOGY  OF  VALUE  109 

ments  of  each  object,  holds,  and  the  problem  is 
that  of  a  marginal  equilibrium.  The  young  lady 
of  our  illustration  would  certainly  have  her  chum 
if  she  have  only  one  dinner,  but  if  she  have  a 
number  of  dinners,  the  "marginal  utility"  of  her 
chum's  presence  may  sink  so  low  that  she  may 
find  the  presence  of  some  one  hitherto  excluded 
more  valuable  at  the  sixth  or  seventh  dinner. 
And,  indeed,  our  conception  of  qualitatively  in- 
compatible values  must  not  be  made  too  abso- 
lute.  Human  nature  is  accommodating  and  prac- 
tical, and  a  little  wickedness  may  be  tolerated  by 
a  good  man  for  the  sake  of  a  value  which  would 
not  induce  him  to  tolerate  more.  He  may  find 
the  "final  increment"  of  his  Sabbath  observance 
lower  than  the  "initial  increment"  of  his  Sunday 
baseball. 

Two  antagonistic_yalues  may  jcohere  in  the 
same^object.  Our  fearful  sight  may  also  be  an 
interesting  sight.  And  the  initial  increment  of  the 
interest  may  outweigh  the  initial  increment  of 
the  fear.  But,  as  the  interest  is  partially  satis- 
fied, the  fear  may  grow,  until  it  finally  overcomes 
the  interest,  and  we  flee.  Indeed,  it  may  be  laid 
down  as  the  law  of  negative  values  that  as  the 
"supply"  increases  (c&teris  paribus)  the  negative 
value  rises  —  the  obverse  of  the  law  of  "dimin- 
ishing  (positive)  utility" — a  doctrine  recognized, 
in  one  of  its  aspects,  in  the  economic  doctrine  of 
"increasing  (psychic)  costs." 

A  further  point  is  to  be  noted  in  the  case 
(especially  though  not  exclusively)  of  these  qual- 
itatively incompatible  values,  where  a  quantita- 


110  SOCIAL  VALUE 

tive  compromise  of  the  sort  described  is  worked 
out  between  them.  The  personality  itself  may 
change,  through  a  growing  familiarity  with  the 
negative  value.  It  may  cease  to  be  a  negative 
value,  and  may  become  positive.  And  if,  as  may 
happen,  this  change  takes  place  quickly,  in  the 
course  of  a  moral  crisis,  our  procjess  would  be, 

-'first,  a  gradually  increasing  negative  value,  as 
the  "supply"  of  the  objects  of  negative  value  is 
increased;  next,  a  sudden  shift  from  a  high  nega- 
tive to  a  high  positive  value,  as  the  personality 
changes,  and  we  come  to  love  what  we  have 
hated;  then  a  gradual  sinking  of  the  new  positive 

.  value  as  the  supply  is  still  further  increased.1 

The  case  of  the  conflict  between  qualitatively 
incompatible  values  is  the  typical  case  of  the  con- 
flict between  "duty  and  pleasure,"  between 
"obligation  and  inclination,"  etc.  Certain  values 
present  themselves  as  "  categorical  imperatives," 
as  "  absolute  universals,"  and  refuse,  or  tend  to 
refuse,  any  compromise.  Our  analysis  would 
tend  to  cast  doubt  on  the  "absolute  absolute- 
ness" of  these  values  (taking  absolute  in  the 
sense  in  which  it  has  been  used  in  the  history  of 
ethics,  as  distinguished  from  the  sense  in  which 
I  have  earlier  used  it  in  this  book 2) .  The  most 

1  An  analogue  in  the  field  of  social  values  is  readily  suggested.  A  new 
heresy  starts,  opposed  by  the  dominant  element  in  the  social  will,  i.e., 
having  a  negative  value  for  the  majority.  As  the  heresy  increases,  the 
negative  value  rises  till,  in  a  crucial  point,  the  tide  turns,  and  the  here- 
tics become  the  dominant  element  in  the  society.  Then  —  since  their 
position  is  far  from  certain  —  new  recruits  to  the  heresy  have  a  high  posi- 
tive value,  but,  as  the  heresy  still  further  spreads,  additional  recruits 
count  for  less  and  less. 

*  Cf.  Urban,  op.  cit.,  passim ;  Ehrenfels,  op.  cit,,  vol.  i,  pp.  43  et  seq. ; 


THE  PSYCHOLOGY  OP  VALUE  111 

significant  thing  about  these  "absolute"  values 
from  the  standpoint  of  our  present  inquiry, 
seems  to  be  the  resistance  which  they  offer  to  the 
"marginal  process."  They  seem  to  insist  that 
their  objects  be  taken  in  toto  or  not  at  all.  They 
tend  to  universalize  themselves,  attaching  to  the 
remotest  possible  increment  of  the  "supply" 
quite  as  strongly  as  to  the  initial  increments. 
They  refuse  to  place  their  objects  in  a  scale  of 
"diminishing  utility."  Such  values  are  those 
which  have  been  so  fortified  by  habit  and  educa- 
tion that  they  are  vital  parts  of  the  personality, 
and  that  any  compromise  where  they  are  in- 
volved seems  treason  to  the  inmost  self.  If  we 
wish  to  make  precise  analogies  between  our  social 
and  our  individual  values,  we  shall  find  here  the 
nearest  approach  in  the  individual  field  to  those 
fundamental  legal  values  which  determine  the 
inmost  character  of  the  state,  and  which  present 
themselves  as  "practical  absolutes"  in  the  legal 
value  system,  e.g.,  democracy,  or  personal  lib- 
erty —  or  fundamental  sociological  values,  like 
the  "color^line." 

It  will  be  noted,  further,  that  our  analysis 
draws  no  hard  and  fast  lines  between  the  different 
sorts  of  value,  ethical,  economic,  esthetic,  reli- 
gious, personal,  etc.,  in  the  sphere  of  the'Jndivid- 
ual's  psychology.  Such  lines  do  not  exist.  There 
are  shadiijgs,  gradations,  quantitative  differ- 
ences which  become  distinct  enough  to  justify  a 

Mackenzie,  criticism  of  Ehrenfela  and  Meinong  in  Mind,  Oct.,  1899.  Cf. 
also,  Wicksteed,  The  Common  Sense  of  Political  Economy,  London,  1910, 
pp.  402  ct  seq. 


112  SOCIAL  VALUE 

classification  of  values.  But  values  never  become, 
on  the  functional  side,  so  fundamentally  different 
in  character  that  there  can  be  no  reduction  of 
them  to  the  "commpn  denominator"  of  power  in 
motivation.    And  especially  is  that  a  false  ab- 
straction which  would    separate    the  different 
sorts  of  value,  ethical,  economic,  etc.,  into  sepa- 
rate, water-tight  systems,  and  let  each  system 
have  its  own  equilibrium  and  its  own  interactions, 
uninfluenced  by  the  other  systems.  The  fact  is, 
simply,  that  ethical  and  esthetic  values  may  con- 
stantly reinforce  economic  values,  economic  val- 
ues reinforce  ethical  values,  or  economic  and 
ethical  or  other  values  may  oppose  each  other, 
and  marginal  equilibria  are  constantly  worked 
out  between  them.  Or,  better,  among  them,  for, 
while  in  the  consciousness  of  the  moment  we  may 
have  only  two  opposing  values  in  mind,  and  may 
have  our  equilibrium  apparently  between  just 
two,  yet  in  fact  the  whole  system  of  values  is 
constantly  tending  toward  equilibrium,  ethical, 
religious,  economic,  esthetic,  all  asserting  them- 
selves, and  finding  their  place  in  the  scale,  and 
getting  their  "margins"  fixed, — extensive  mar- 
gins and  intensive  margins.  But  this  is  so  ob- 
viously merely  a  generalization  of  well-known 
economic  laws,  that  further  detail  is  needless. 
One  point  may  be  mentioned,  however.    Price 
is  to  be  generalized  in  the  same  way  as  value. 
Since  this  equilibrium  among  values  holds,  then 
'any  object  of  value  may  be  used  to  measure 
the  value  of  any  other.    If  the  presence  of  her 
chum  at  the  fifth  dinner  is  in  equilibrium  with 


THE  PSYCHOLOGY  OF  VALUE  113 

the  presence  of  some  hitherto  excluded  friend, 
for  our  young  lady,  then  the  one  is  the  price 
of  the  other,  and  measures  her  value.  A  mate- 
rial good  which  one  takes  in  return  for  an  im- 
moral act  is  the  price  of  that  act.  And  if,  in  a 
moment  of  fundamental  ethical  crisis,  a  man 
surrenders  a  cherished  purpose  about  which  his 
whole  life  has  been  built,  to  the  allurement  of 
some  dazzling  temptation,  it  is  much  more  than 
a  metaphor  to  speak  of  "the  price  of  a  soul."  l 

The  Austrian  analysis  was  essentially  faulty, 
then,  not  so  much  in  its  hedonistic  psychology  — 
for  it  can  be  freed  from  that 2  —  as  in  its  ab- 
straction of  the  economic  from  other  aspects 
of  the  individual's  value  system.  Equilibria 
among  economic  values  will  not  explain  even  the 
individual's  economic  behavior  —  do  not  by  any 
means  constitute  a  self-complete  system.  This 
abstraction  has  been  noted  before.3  The  other 
abstraction  of  the  Austrians,  the  abstraction 
olTthe  individual  from  his  vital,  organic  connec- 
tion with  the  social  whole,  we  shall  treat  more 
fully  later. 

So  far,  we  have  kept  pretty  strictly  within  the 
field  of  "individual  psychology"  and  "individ- 
ual values."  But  we  shall  find,  when  we  come 
to  the  field  of  the  social  values,  that  essentially 
the  same  laws  hold.  On  the  functional  side,  the 

1  The  generalization  of  the  idea  of  price,  while  not  original  with  Wick- 
steed,  is  interestingly  developed  by  him  in  chaps.  I  and  II  of  his  Com- 
mon Sense  of  Political  Economy,  London,  1910. 

2  Davenport,  op.  cit.,  pp.  303-11,  gives  a  good  summary  of  economic 
discussions  of  hedonism.  His  own  view  is  that  the  Austrians  are  not  essen- 
tially bound  up  with  hedonism. 

1  Supra,  chaps,  vi  and  vu. 


114  SOCIAL  VALUE 

analogy  between  the  individual  mind  and  the 
social  mind  is  a  very  close  one,  and  the  corre- 
spondences on  the  structural  side  are  numerous 
also.  While  we  shall  not  try  to  find  analogies  in 
the  social  field  for  all  these  laws  of  individual 
value,  it  is  not  because  of  any  difficulty  that  the 
problem  presents,  but  rather,  because  it  is  un- 
necessary for  the  vindication  of  our  thesis  to 
do  so. 


CHAPTER  XI 

RECAPITULATION.     THE  SOCIAL   VALUES.     FUNCTIONS 
OF  THE  VALUE  CONCEPT  IN  ECONOMICS 

OUR  conclusions  reached  in  previous  chapters, 
from  the  standpoint  of  economic  theory,  and  from 
the  standpoint  of  sociological  theory,  alike  for- 
bid us  to  stop  with  the  results  so  far  obtained  as 
to  the  nature  of  value.  From  the  standpoint  of 
social  theory,  we  are  unable  to  consider  the  in- 
dividual values  discussed  in  the  last  chapter  as 
completely  accounted  for  on  the  psychical  side 
by  what  goes  on  in  the  individual  mind:  every 
individual  mind  is  a  part  of  a  larger  whole;  every 
thing  in  the  individual  mind  has  been  influenced 
by  processes  in  the  minds  of  others;  every  process 
in  the  individual  mind  influences,  directly  or  in-  *" 
directly,  processes  in  the  minds  of  others.  There 
is  a  social  mind.  And  the  values  in  the  mind  of 
an  individual  constitute  no  self -complete  and  in- 
dependent system,  either  in  their  origin,  in  their 
interactions,  or  in  their  consequences  for  action. 
In  our  psychological  phrase,  their  "presupposi- 
tions" include  elements  in  the  minds  of  "other 
men,  and  they  themselves  constitute  part  of  the 
"presuppositions"  of  the  values  in  the  minds  of 
other  men.  Finally,  there  are  values  which  cor- 
respond to  the  values  of  no  individual  mind, 
great  social  values,  whose  presuppositions  aretre- 


116  SOCIAL  VALUE 

mendously  complex,  including  individual  values 
in  the  minds  of  many  men,  as  well  as  other  fac- 
tors which  we  shall  have  to  analyze  in  considera- 
ble detail,  great  social  values  whose  motivating 
power  directs  the  activities  of  nations,  of  great 
industries,  of  literary  and  artistic  "schools,"  of 
churches  and  other  social  organizations,  as  well 
as  the  daily  lives  of  every  man  and  woman  — 
impelling  them  in  paths  which  no  individual  man 
foresaw  or  purposed.  In  Urban's  phrase,  — 

between  the  subjectively  desired  and  the  objectively  de- 
sirable in  ethics,  between  subjective  utility  and  sacrifice 
and  objective  value  and  price  in  economic  reckoning, 
between  the  subjectively  effective  and  the  objectively 
beautiful  in  art,  there  is  a  difference  for  feeling  so  potent 
that  in  naive  and  unreflective  experience  the  feelings  with 
such  objectivity  of  reference  are  spoken  of  as  predicates 
of  the  objects  themselves.1 

And  our  theory  carries  us  even  further  than 
Professor  Urban  cares  to  go  here.  Naive  and 
unreflecting  experience  is  perfectly  justified  in 
treating  these  objective  values  as  qualities  of  the 
objects  themselves.  To  the  individual  man,  an 
objective  value,  say  the  value  of  an  economic 
good,  is  "as  a  rule,  a  quality  almost  wholly  inde- 
pendent of  his  personal  subjective  feelings  or 
point  of  view.  The  average  man,  "by  taking 
thought,"  can  no  more  affect  the  value  of  wheat 
or  corn  or  other  big  staple  than  he  can  "add 
a  cubit  to  his  stature."  For  the  great  mass  of 
men,  and  the  great  mass  of  commodities,  this 
holds  true.  The  individual  finds  the  world  of 

1  Op.  cit.,  p.  17. 


RECAPITULATION  —  SOCIAL  VALUES          117 

economic  values  a  part  of  the  brute  universe, 
like  the  force  of  gravity,  or  the  weather,  or  the 
law  against  murder  —  less  invariable  than  the 
force  of  gravity,  and  less  variable,  as  a  rule,  than 
the  weather  —  to  which  he  must  adapt  his  in- 
dividual economy.  He  is  not  wholly  impotent 
to  change  this  world  of  economic  values,  nor 
is  he  wholly  without  influence  on  the  balance  of 
cosmic  forces.  And,  if  possessed  of  enough 
social  power  (which  we  shall  find  to  constitute 
the  essence  of  these  social  values)  he  may  sub- 
stantially modify  the  action  of  the  law  against 
murder,  or  the  values  of  those  commodities 
about  which  the  rich  may  be  capricious;  or  even, 
if  intelligent  in  the  use  of  his  power,  he  may 
undertake  a  successful  "bull"  campaign,  and 
force  up  the  value  of  wheat  or  cotton.  But  even 
in  such  cases,  he  deals  with  objective  facts,  — 
which  often,  in  the  midst  of  a  Hull  campaign, 
behave  in  a  most  surprising  and  disconcerting 
manner ! 1  The  existence  of  external  constraining 
and  directive  forces  are  matters  of  every  day 
experience.  Laws,  moral  values,  social  constraints 
of  a  thousand  subtle  and  obvious  kinds,  are  facts 
so  well  known  that  education  has  made  it  its 
central  task  to  teach  the  individual  how  to  ad- 
just himself  to  them.  They  have  been  described 
and  elaborated  in  innumerable  books.2  That 

1  Cf.  Royce,  J.,  The  World  and  the  Individual,  New  York.  1901,  vol.  I. 
pp.  209-10,  and  225. 

2  I  may  refer  here  particularly  to  Durkheim,  De  la  division  du  travail 
social,  Paris,  1893.    In  giving  this  reference,  of  course,  I  do  not  commit 
myself  to  the  "mediaeval  realism"  of  which  Durkheim  has  been,  perhaps 
justly,  accused.  Cf.,  also,  Professor  Ross's  admirable  Social  Control. 


118  SOCIAL  VALUE 

they  exist  is  certain.    Their  origin,  nature  and 
function  we  shall  study  in  what  is  to  follow. 

We  were  led  to  a  similar  conclusion  by  the 
analysis  of  the  necessities  of  economic  theory. 
Economic  value  as  a  quality,  present  in  a  good 
in  definite,  quantitative  degree,  regardless  of  the 
idiosyncrasy  of  the  particular  holder  of  the 
good,  we  found  a  necessity  of  economic  thought. 
The  argument  may  be  briefly  recapitulated,  and 
a  few  points  added.  If  goods  are  to  be  added 
together  and  a  sum  of  wealth  obtained,  there 
must  be  a  homogeneous  element  in  them  by 
virtue  of  which  the  addition  can  be  made.  We 
do  not  add  a  crop  of  wheat  and  a  lead-pencil,1 
and  a  gold  watch,  and  twenty  dollars  and  a 
theatre  ticket,  on  the  basis  of  length  or  weight 
or  other  physical  quality.  Only  by  picking  out 
the  homogeneous  quality ,  value,  can  we  add  them. 
We  cannot  compare  two  economic  goods,  and 
put  them  into  a  ratio,  except  on  the  basis  of 
such  a  homogeneous  quality.  We  have  no  terms 
for  our  ratios  apart  from  quantities  of  value,  and 
yet  our  ratios  must  have  terms.  We  find  econ- 
omists speaking  of  value  as  the  essential  char- 
acteristic or  quality  of  wealth.  We  find  theo- 
rists speaking  of  money  as  a  "measure  of  values " 
—  a  conception  only  possible  if  value  be  a  quality 
of  the  sort  of  which  we  speak,  present  both  in  the 
money  measure  and  in  the  thing  measured  in 
definite  quantitative  degrees.  A  point  or  two 
may  be  added.  We  find  economists,  notably  the 

1  Cf.  Ely,  Outlines  of  Economics,  1908  ed.,  pp.  99-100,  and  Tarde, 
Psychologic  Economique,  vol.  i,  p.  85,  n.  See  supra,  chap.  n. 


RECAPITULATION  — SOCIAL  VALUES         119 

Austrians,  undertaking  the  problem  of  "Impu- 
tation," breaking  up  the  value  of  a  consumption 
good  into  different  parts,  one  part  being  assigned 
to  the  labor  immediately  concerned  in  its  pro- 
duction, and  other  parts  of  that  value  to  goods 
of  the  next  "rank"  —  owned  by  people  different 
from  those  who  consume  the  good  —  and  this 
value  further  subdivided  among  goods  of  re- 
moter ranks, — the  whole  process  possible  only 
if  the  original  value  be  an  objective  quantity 
of  the  sort  described.  We  find  a  differential  por- 
tion of  a  crop  of  wheat  compared  with  the  land 
which  produced  it,  and  spoken  of  as  a  percentage 
of  the  land,  which  is  true  only  if  the  value  of  each 
be  considered  —  and  indeed  is  meaningless,  else. 
Or,  we  find  merchants  reckoning  their  gains  in 
the  form  of  money  at  the  end  of  the  year,  as  a 
certain  percentage  of  their  capital  —  which  has 
consisted  throughout  the  year  of  goods  of  various 
sorts.  Everywhere  in  the  economic  analysis  this 
conception  of  value  has  been  essential  for  the 
validity  of  the  analysis,  and  this  is  especially  true 
when  we  come  to  the  ultimate  problems  of  mone- 
tary theory.  We  may  ignore,  sometimes,  the 
element  of  value  when  dealing  with  non-mone- 
tary problems,  in  terms  of  quantities  of  money, 
simply  because  it  is  not  necessary  to  refer  to 
fundamental  principles  explicitly  all  the  time. 
But  when  we  come  to  the  problem  of  money 
itself,  we  must  make  use  of  the  value  concept, 
and  the  value  concept  is  implicit  in  the  whole 
procedure. 
Further,  the  value  concept  has  been  called 


120  SOCIAL  VALUE 

upon  to  explain  the  motivation  of  the  economic 
activity  of  society,  and  value  has  been  conceived 
of  as  a  motivating  force.1  Schseffle,  especially, 
has  stressed  this  phase  of  the  matter  in  his  criti- 
cism of  the  socialistic  theories  of  value.  "Util- 
ity value,"  he  holds,  does  direct  industry  into 
proper  channels,  but  a  value  based  on  labor- 
time  would  get  supply  and  needs  into  a  hopeless 
discrepancy.2 

No  ratio  "between  objective  articles"  will 
serve  these  functions  which  the  economists  have 
put  upon  the  value  concept.  Value  as  a  purely  in- 
dividual phenomenon,  varying  from  man  to  man, 
will  in  no  way  3  serve  these  purposes  of  the  econo- 
mists. Value  as  a  mere  brute  quantity  of  physi- 
cal objects  given  in  exchange  for  other  physical 
objects,  could  in  no  way  serve  these  purposes. 
Value  must  be  an  objective  quality,  a  power, 
(embodied  in  the  object,  independent  of  the  in- 
dividual judgment  or  desire.  A  strong  feeling 
that  this  is  so  is  manifested  in  the  term  which  the 

1  Cf.  Wieser.  Natural  Value,  pp.  65,  162-63,  210-12,  and  36;  Flux, 
Economic  Principles,  chap.  n. 

2  Quintessence  of  Socialism,  London,  1898,  pp.  55-59,  91  et  seq.,  123-24. 
1  I  take  pleasure  in  availing  myself  of  the  privilege  which  Professor 

W.  A.  Scott,  of  the  University  of  Wisconsin,  accords  me,  of  quoting  him 
to  the  effect  that  "such  a  conception  of  value  [a  value  concept  which 
makes  the  value  of  a  commodity  a  quantity,  socially  valid,  regardless  of 
the  individual  holder  of  the  coin  or  the  commodity,  and  regardless  of  the 
particular  exchange  ratio  into  which  the  value  quantity  enters  as  a  term] 
is  absolutely  essential  to  the  working-out  of  economic  problems."  Pro- 
fessor Scott  has  been  driven  to  this  conclusion  in  the  course  of  his  studies 
in  the  theory  of  money.  Dean  Kinley  expresses  a  somewhat  similar  view 
in  his  Money,  p.  62.  It  is,  of  course,  in  the  theory  of  money  that  the  need 
for  such  a  concept  makes  itself  most  acutely  felt.  But  the  same  view  is 
expressed  by  Professor  T.  S.  Adams,  from  the  standpoint  of  the  statisti- 
cian. See  his  article,  "Index  Numbers  and  the  Standard  of  Value,"  Jour, 
of  Pol  Econ.,  vol.  x,  1901-02,  pp.  11  and  18-19. 


RECAPITULATION  —  SOCIAL  VALUES          121 

English  School  so  often  uses  as  the  equivalent 
of  value,  namely,  "purchasing  power"1 — a 
term  which  Bohm-Bawerk  approves.2  The  notion 
of  relativity  which  has,  historically,  been  bound 
up  with  this  term,  we  have  criticized  in  chapter 
u,  and  it  is  not  necessary  to  repeat  the  argument 
here.  But  the  other  aspect  of  it,  its  recognition 
of  the  dynamic  character  of  value,  ancL  of  the 
quantitative  character  of  value,  even  though 
often  confusedly  and  vaguely,  seems  very  much 
to  strengthen  the  case  for  the  thesis  I  am  main- 
taining.3 

The  effort  of  the  Austrians,  and  of  other  schools 
of  economic  theory,  to  explain  and  justify  this 
notion  of  value  as  an  objective  quantity,  has 
already  been  considered,  and  our  conclusion 
has  been  that,  through  a  too  narrow  delimitation 

1  Even  Professor  H.  J.  Davenport  finds  a  quantitative  value  concept 
necessary  in  places.   For  example,  on  page  573  of  his  Value  and  Distribu- 
tion, he  speaks  of  capital,  considered  as  a  cost  concept,  as  standing  "for 
the  total  invested  fund  of  value,  inclusive  of  all  instrumental  values,  and 
of  all  the  general  purchasing  power  devoted  to  the  gain-seeking  enter- 
prise."  It  might  be  unkind  to  remind  him  of  his  definition  of  value  on 
page  569,  and  ask  him  what  a  "  fund  "  of  "  ratio  of  exchange  "  might  mean ! 
And  the  notion  of  value  as  a  quantity,  instead  of  a  ratio,  is  involved,  as 
indicated  in  the  text,  in  the  term,  "purchasing  power,"  which  he  also 
uses  in  the  passage  quoted.   This  term,  "purchasing  power,"  as  appar- 
ently a  substitute  for  value,  Professor  Davenport  uses  in  several  instances, 
where  the  ratio  notion  clearly  will  not  work:  on  page  561,  "distribution  of 
purchasing  power,"  page  562, "  redistribution  of  purchasing  power,"  and 
page  571.  I  say  "apparently,"  for  I  do  not  think  Professor  Davenport 
anywhere  in  the  volume  gives  a  formal  definition  of  "purchasing  power." 

2  "Grundzilge,"  etc.,  Conrad's  Jahrbucher,  1886,  pp.  5  and  478,  n. 

*  This  line  of  argument,  drawn  from  the  usage  of  the  economists  in  the 
treatment  of  other  terms,  and  in  the  handling  of  problems,  might  be 
almost  indefinitely  expanded.  Almost  everybody  has  a  quantitative  value 
concept  in  mind  when  he  is  reasoning  about  practical  problems.  The 
trouble  comes  only  when  a  value  theory  has  to  be  constructed!  Cf.  the 
discussion  of  production  as  the  "creation  of  utilities,"  infra  chap.  xvin. 


122  SOCIAL  VALUE 

of  their  determinants,  they  have  been  led  into 
circular  reasoning.  A  further  criticism  is  now 
possible,  in  the  light  of  our  sociological  and 
psychological  conclusions:  the  picking  out  of 
any  abstract  elements,  however  numerous,  with 
the  effort,  by  a  synthesis,  to  combine  them  into 
a  concrete  social  quantity,  must  fail.  In  the  pro- 
cess of  abstraction  we  leave  out  vital  elements 
of  the  concrete  social  situation;  how  shall  we 
expect  these  vital  elements  left  out  to  reappear 
when  we  put  the  abstract  elements  into  a  syn- 
thesis? They  cannot,  if  the  synthesis  be  logically 
made.  And  it  is  precisely  because  Professor 
Davenport  is  so  accurate  in  his  logic  that  he  fails 
to  get  a  social  quantity  out  of  the  abstract  ele- 
ments of  subjective  utility,  etc.  But  the  major- 
ity of  economists,  less  careful  in  their  formal 
logic,  but  more  impressed  by  the  facts  of  social 
life  and  by  the  exigencies  of  getting  a  working 
set  of  concepts,  have  assumed  and  used  the  quan- 
titative concept,  with  satisfactory  results  so  far 
as  practical  problems  are  concerned,  but  with- 
out fundamental  theoretical  consistency.  The 
elements  which  the  abstract  theories  suppress 
persist,  under  the  guise  of  economic  value  itself, 
in  the  facts  of  life,  and  take  their  vengeance  on 
the  theory  by  forcing  it  into  a  circle.  Our  prob- 
lem, then,  is  not  to  find  out  certain  elements  out 
of  which  to  construct  social  value  by  a  synthesis. 
The  proper  procedure  will  be  the  reverse  of  that: 
\  to  take  social  value  as  we  find  it  —  i.e.,  as  it 
functions  in  economic  life,  —  and  then  to  analyze 
it,  picking  out  certain  prominent  and  significant 


RECAPITULATION  —  SOCIAL  VALUES          123 

phases,  or  moments,  in  it,  which,  taken  abstractly, 
are  not  the  whole  story,  but  which  furnish  the 
criteria  of  social  value,  and  control  over  which 
is  significant  for  the  purpose  of  controlling  social 
values. 

In  subsequent  chapters,  we  shall,  carrying 
out  this  plan,  try  to  put  concrete  meaning  into  our 
abstract  formulation  of  the  problem. 


CHAPTER  XH 

SOCIAL  VALUE:  THE  THEORIES  OF  URBAN  AND  TARDE 

OUR  point  of  view  will  be  more  adequately  de- 
fined if  we  consider  briefly  the  theories  of  social 
value,  set  forth  from  the  angle  of  a  general  (as 
opposed  to  a  specifically  economic)  conception 
of  value,  by  Professor  W.  M.  Urban  and  Gabriel 
Tarde.  These  theories  contain  some  elements 
which  we  shall  need,  and  our  criticism  of  them 
will  bring  into  clearer  light  the  need  for  the  dis- 
tinctive point  of  view  of  this  book. 

Professor  Urban 's  conception  as  to  the  nature 
of  value,  in  its  individual  manifestation,  has 
been  already  indicated,  in  part,  in  chapter  x. 
Stressing  the  organic  nature  of  the  relations  of 
a  value  to  other  phases  of  the  mental  life,  in- 
sisting on  a  recognition  of  the  "presuppositions" 
of  value,  and  recognizing  that  both  feeling  and 
/  desire  (or  desire  -  disposition)  are  involved  in 
value  —  our  cursory  account  cannot  begin  to  do 
justice  to  the  subtlety  and  exhaustiveness  of  his 
masterly  analysis  —  he  still  insists  on  finding  the 
fundamental  nature  of  value  in  a  phase  of  its 
structure  (rather  than  in  its  function),  namely, 
in  the  feeling.  From  this  part  of  his  doctrine  we 
have  found  it  necessary  to  differ.  When  he  comes 
to  the  problem  of  social  value,  he  carries  over  the 
same  conception  of  value,  and  he  finds  that  social 


THEORIES  OF  URBAN  AND  TARDE  125 

values  appear  when  many  individuals,  through 
"sympathetic  participation,"/^/  the  same  value. 
With  our  conclusion  (chapter  vm)  that  we  can 
share  each  other's  emotional  life  he  is  in  thorough 
accord.  His  argument  in  this  connection  is  ad- 
mirable.1 His  interest  is  primarily  in  morahsocial 
values,  and  he  attempts  no  detailed  treatment  of 
economic  social  values,  seeming  to  hold  that  the 
Austrian  treatment  of  objective  value  is  ade- 
quate.2 Both  moral  and  economic  values  are  "ob- 
jective and  social." 3 

Collective  desire  and  feeling,  when  it  has  acquired  this 
"common  meaning,"  when  the  object  of  desire  and  feeling 
is  consciously  held  in  common,  we  may  describe  as  Social 
Synergy;  and  the  objective,  over-individual  values  mayT)e 
described  as  the  resultants  of  social  synergies.  The  intro- 
duction of  this  term  has  for  its  purpose  the  clearest  possible 
distinction  between  social  forces  as  conscious  and  as  sub- 
conscious. It  is  with  the  former  that  we  are  here  concerned. 4 

Conscious  collective  fueling  is  thus  insisted 
upon  as  an  essential  in  social  values,  and  Pro- 
fessor Urban  insists5  that  the  value  ceases  to 
be  a  value  as  this  conscious  feeling  wanes  — 
even  though  conceding 6  that  it  retains  the  power 
of  influencing  the  felt  values,  after  it  has  passed 
into  the  realm  of  "things  taken  for  granted." 

But  this  stressing  of  the  conscious  element 
of  feeling  —  which  as  I  have  previously  shown  is 
a  variable  element  even  within  the  individual 
psychology,  and  has  no  necessary  quantitative 
relation  to  the  functional  significance,  the  amount 

1  Op.  cit.,  chap,  vm,  esp.  p.  243.  •  Ibid.,  p.  319. 

*  Ibid.,  p.  312.  «  Ibid.,  p.  318. 

•  Ibid.,  pp.  333-36.  «  Ibid.,  p.  335. 


126  SOCIAL  VALUE 

of  motivating  power,  of  the  value  —  makes  it 
really  impossible  for  him  to  resolve  the  question 
of  how  the  strength  of  a  social  value  is  to  be  deter- 
mined. He  does,  indeed,  undertake  something 
of  the  sort 1  (he  is  speaking  of  ethical  values), 
making  the  quantity  of  value  depend  on  "supply 
and  demand,"  the  supply  depending  on  the  num- 
ber of  people  willing  to  supply  a  given  moral 
act,  and  the  intensity  of  their  willingness  to  do 
it  —  extension  and  intention  both  being  recog- 
nized. And  demand  is  similarly  determined. 
The  thing  seems  to  be  nothing  more  than  an 
arithmetical  sum  of  intensities  of  individual 
feelings,  or,  most  justly,  individual  values.  But 
this  leaves  us  no  wiser  than  before  as  to  the  social 
weight,  the  social  validity,  of  these  social  values. 
An  infinite  deal  wouldjdepend,  both  in  the  case 
of  supply  and  demand,  on  who  the  individuals 
are.  A  demand  for  a  given  act  from  a  poor  group 
of  fanatics,  however  intense,  might  count  Tor 
little,  while  such  a  demand  coming  from  a  group 
with  great  prestige,  with  great  social  power, 
might  have  a  very  great  significance.  If  we  are 
trying  to  get  an  objective  quantity  of  social 
value,  which  shall  have  a  definite  weight  in  deter- 
mining social  action  —  the  function  of  social 
values  —  we  are  as  poorly  off  as  we  were  with 
the  Austrian  analysis  which,  in  order  to  get  an 
objective  quantity  of  economic  value  out  of  in- 
dividual "marginal  utilities,"  has  to  assume 
value  in  the  background  as  the  validating  force 
behind  these  individual  elements.  The  error  here, 

1    Op.  cit.,  pp.  329-30. 


THEORIES  OF  URBAN  AND  TARDE          127 

as  there,  comes  from  an  abstraction,  from  cen- 
tring attention  upon  the  conspicuous  conscious 
elements.  And  it  comes  in  stressing  the  structure, 
the  content,  of  social  values,  to  the  exclusion 
of  their  functional  power.  Here  is  our  real  prob- 
lem, if  we  would  determine  the  social  validity  of 
values.  This  lurking  element  of  social^power 
remains  an  unexplained  residuum. 

This  residuum  of  power,  backing  up  the  con- 
scious psychological  factors,  gets  explicit  recog- 
nition, even  though  no  real  explanation,  at  the 
hands  of  Gabriel  Tarde,1  to  whose  theory  of  so- 
cial value  we  now  turn.  I  quote  chiefly  from  his 
Psychologie  Economique,  and  the  numerals  which 
follow  refer  to  pages  in  volume  i.  (63-64)  Value 
understood  in  its  largest  sense,  takes  in  the 
whole  of  social  science.  It  is  a  quality  which  we 
attribute  to  things,  like  color,2  mit  which,  like 
color,  exists  only  in  ourselves.  ...  It  consists 
in  the  accord  of  the  collective  judgments  .  .  . 
as  to  the  capacity  of  objects  to  be  more  or  less, 
and  by  a  greater  or  less  number  of  persons,  be- 
lieved, desired,  or  admired.  This  quality  is  thus 
of  that  peculiar  species  of  qualities  which  present 
nunaerical  degrees,  and  mount  or  descend  a  scale 
without  essentially  changing  their  nature,  and 
hence  merit  the  name  of  quantities. 

1  "La  croyance  et  le  desir:  possibility  de  leur  mesure,"  Rev.  phUoso- 
phique,  vol.  x  (1880),  pp.  150,  264.  "La  psychologic  en  economic  poli- 
tique,"  Ibid.,  vol.  xn  (1881),  pp.  232,  401.  "  Les  deux  sens  de  la  valeur," 
Rev.  d' economic  politique,  1888,  pp.  526,  561.  "L'idee  de  valeur,"  Rev. 
politique  et  litteraire  (Rev.  Bleue),  vol.  xvi,  1901.  Psychologie  Economique, 
Paris,  1902. 

*  Cf.  Conrad,  Grundriss  zum  Studium  der  politischen  Oekonomie,  Jena, 
1902,  Erster  Teil,  p.  10. 


128  SOCIAL  VALUE 

•  There  are  three  great  categories  of  value: 
"valeur-verite"  "valeur-utilite"  and  "valeur- 
beaute."  To  ideas,  to  goods  (in  a  generic  sense  of 
the  term),  and  to  things  considered  as  sources 
"de  voluptes  collectives,"  we  attribute  a  truth,  a 
utility,  a  beauty,  greater  or  less.  Quite  as  much 
as  utility,  beauty  and  truth  are  children  of  the 
opinion  of  the  mass,  in  accord,  or  at  war,  with 
the  reason  of  an  elite  which  influences  it. 

(It  may  be  noted  in  passing  that  Tarde's 
"  trinitarian "  conception  of  value  is  not  as  arti- 
ficial as  it  seems.  It  is  simply  a  method  of  classi- 
fication, and  there  are  many  subdivisions  under 
each  head.  Economic  value,  e.g.,  is  a  subspecies 
within  the  group  of  utility  values  —  "goods" 
include  "pouvoirs,"  "droits"  "mmfes,>r~and 
"richesses"  (66).  Our  own  conception  is,  of 
course,  that  values  are  thoroughly  "pluralistic  " 
as  to  their  structure,  and  are  "monistic"  in 
their  function.) 

(64)  The  greater  or  less  truth  of  a  thing  sig- 
nifies three  things  diversely  combined :  the  greater 
or  smaller  number,  the  greater  or  less  social  im- 
portance ("poids,"  "  consideration,"  "competence  " 
"reconnue")  of  the  people  who  believe  it,  and 
the  greater  or  less  intensity  of  their  belief  in  it. 
The  greater  or  less  utility  of  an  object  expresses 
the  greater  or  less  numBer  of  people  who  desire  it 
in  a  given  society  at  a  given  time,  the  greater  or 
less  social  "poids"  (" ici poids  veut  dire  pouvoir  et 
droit")  of  the  persons  who  desire  it,  and  the 
greater  or  less  intensity  of  their  desire  for  it.  And 
so  with  beauty. 


THEORIES  OF  URBAN  AND  TARDE  129 

Here  is,  then,  an  explicit  recognition  of  the 
element  of  the  social  weight  of ..those  who  create 
a  social  value,  as  a  factor  coordinate  with  their 
nuniber  and  the  intensity  of  their  desires,  etc. 
Toward  resolving  it,  however,  Tarde  makes  no 
real  contribution.  If  enough  be  read  into  the 
parenthetical  expressions  given  above,  follow- 
ing the  word  "poids"  in  each  case,  they  would 
be  found  to  harmonize  with  the  theory  of  the 
writer,  shortly  to  be  set  forth.  As  it  happens, 
however,  Tarde  attempts  to  resolve  this  factor 
of  the  social  weight  of  a  participant  in  a  social 
value,  in  an  analogous  case,  and  gives  us  a  dif- 
ferent sort  of  explanation.  He  is  seeking  a  * '  glorio 
metre,"  or  measure  of  glory  —  for  glory  is  a 
social  value  too.  He  finds  that  to  determine  a 
man's_glory  we  must  take  account  of  two  things : 
one  his  notoriety,  and  the  other,  the  admiration 
in  which  he  is  held  (71-72).  The  first  is  simple: 
we  will  count  the  number  who  watch  him  and 
talk  about  what  he  does.  The  second  is  harder, 
for  we  must  not  merely  count  the  number  who 
admire  him,  but  also  determine  the  importance 
of  each  as  an  admirer.  But  how  get  at  this?  Tarde 
suggests  that  the  study  of  the  cephalic  index 
will  throw  light  upon  the  problem  —  no  satis- 
factory solution,  I  think !  —  but  says  that  any- 
how the  problem  is  practically  solved  every  day 
in  university  and  administrative  examinations. 

Apart  from  the  fact  that  conscious^  desire  (or 
conscious  belief,  etc.),  rather  tEan  functional 
power,  is  made  the  basis  of  Tarde's  social  value, 
and  apart  from  the  failure  to  give  any  real  ac- 


130  SOCIAL  VALUE 

count  of  the  origin  of  this  "  social  weight,"  of  the 
individuals  in  the  group  which  creates  the  social 
value,  there  is  a  further  defect  in  Tarde's  analy- 
sis which  cannot  be  strongly  objected  to.  It  is 
his  effort  to  treat  organic  processes  as  if  they 
were  an  arithmetical  sum  of  elements.  A  sum  of 
abstractions  will  not  give  you  a  concrete  reality. 
A  man's  social  weight  is  not  a  thing  independent 
of  relations,  a  thing  which  can  be  thrown  now 
here  and  now  there  with  the  same  results  in  each 
case.  And  two  men,  each  with  a  definite  social 
weight,  do  not  have  precisely  twice  that  social 
weight  when  they  combine  with  each  other.  Two 
great  leaders  of  opposing,  evenly  balanced  politi- 
cal parties,  combining  their  influence,  may  secure 
wonderful  results,  leading  both  parties  to  agree 
on  a  programme,  and  carrying  it  through.  Two 
equally  great  leaders,  but  both  within  the  same 
party,  may  be  unable  to  accomplish  anything 
by  combining  their  efforts.  And  it  may  happen 
that  two  men,  each  with  great  weight  in  his  own 
sphere,  would  be  so  incongruous  if  they  tried  to 
cooperate,  that  their  joint  weight  would  be  less 
than  the  weight  of  either  alone.  It  is  not  a  mat- 
ter of  arithmetical  addition.  Social  power  can 
be  used  in  certain  ways,  and  in  certain  organic 
connections.  If  we  care  to  use  a  mechanical 
phrase,  the  effort  to  use  it  out  of  organic  con- 
nections is  apt  to  result  in  so  much  "friction" 
that  much  of  the  power  is  lost. 

The  objection  to  the  insistence  on  the  amount 
of  conscious  desire  or  feeling  as  a  criterion  of 
the  amount  of  value  holds  for  social  values  quite 


131 

as  much  as  for  individual  values.  The  social 
value  of  the  gold  standard,  judging  by  the  amount 
of  desire  and  feeling  involved,  by  the  degree  to 
which  it  was  a  factor  in  consciousness,  was 
vastly  greater  during  the  campaign  of  1896, 
while  its  validity  was  still  in  question,  than  it 
was  after  it  had  been  validated,  and  made  a 
really  effective  fact.  Social^  value  depends,  not 
on  consciousjntensity,  but  on  motiyating^DOwer. 
The  social  consciousness,  as  the  individual  con- 
sciousness, is  economical.  And  the  need  for  con- 
sciousjeeling,  for  conscious  desire,  in  connection 
with  social,  as  with  individual,  values,  arises  wheja, 
values  must  be  compared,  when  they  are  in 
question,  when  they  must  show  themselves  for 
what  they  are,  that  they  may  be  brought  into 
equilibrium  with  antagonistic  values.  And  the 
amount  of  consciousness  will  not  be  greater  than 
the  need  for  it  —  and,  alas,  is  rarely  as  great  as 
the  need !  When  a  value  becomes  accepted,  when 
its  place  is  secure,  when  the  equilibrium  is  es- 
tablished, conscious  feeling  and  desire  with  ref- 
erence to  it  tend  to  pass  away,  and  peace  comes. 
Tarde  seems  to  recognize  this,  indeed,  when  he 
says  (72,  n.) :  — 

Of  nobility,  as  of  glory,  it  is  proper  to  remark  that  it  is  a 
force,  a  means  of  action,  for  him  who  possesses  it,  but  that 
it  is  a  faith,  a  peace,  for  the  people  who  accept  it,  and  who, 
in  believing  in  it,  create  it. 


CHAPTER 

ECONOMIC  SOCIAL  VALUE 

How  are  we  to  get  out  of  our  circle: *  The  value 
of  a  good,  A,  depends,  in  part,  upon  the  value 
embodied  in  the  goods,  B,  C,  and  D,  possessed 
by  the  persons  for  whom  good  A  has  "utility," 
and  whose  "effective  demand"  is  a  sine  qua  non 
of  A's  value?  The  most  convenient  point  of  de- 
parture seems  to  be  the  simple  situation  which 
Wieser  has  assumed  in  his  Natural  Value.2  Here 
the  "artificial"  complications  due  to  private 
property  and  to  the  difference  between  rich  and 
poor  are  gone,  and  only  "marginal  utility"  is 
left  as  a  regulator  of  values.  But  what  about 
value  in  a  situation  where  there  are  differences 
in  "purchasing  power"?  How  assimilate  the 
one  situation  to  the  other? 

A  temporal  regressus,  back  to  the  first  piece 
of  wealth,  which,  we  might  assume,  depended  for 
its  value  solely  upon  the  facts  of  utility  and 
scarcity,  and  the  existence  of  which  furnished  the 
first  "purchasing  power"  that  upset  the  order  of 
"natural  value,"  might  be  interesting,  but  cer- 
tainly would  not  be  convincing.  In  the  first  place, 
there  is  no  unbroken  sequence  of  uninterrupted 
economic  causation  from  that  far  away  hypo- 

1  See  chaps,  vi  and  vii,  tupra.       *  Bk.  n,  chap.  vi. 


ECONOMIC  SOCIAL  VALUE  '133 

thetical  day  to  the  present,  in  the  course  of  which 
that  original  quantity  of  value  has  exerted  its 
influence.  The  present  situation  does  not  differ 
from  Wieser's  situation  simply  in  the  fact  that 
some,  more  provident  than  others,  have  saved 
where  others  have  consumed,  have  been  indus- 
trious where  others  have  been  idle,  and  so  have 
accumulated  a  surplus  of  value,  which,  used  to 
back  their  desires,  makes  the  wants  of  the  in- 
dustrious and  provident  count  for  more  than  the 
wants  of  others.  And  even  if  these  were  the  only 
differences,  it  is  to  be  noted  that  private  property 
has  somehow  crept  in  in  the  interval,  for  Wieser's 
was  a  communistic  society.  And  further,  an  emo- 
tion felt  ten  thousand  years  ago  could  scarcely 
have  any  very  direct  or  certain  quantitative  con- 
nection with  value  in  the  market  to-day.  Even 
if  there  had  been  no  "disturbing  factors"  of  a 
non-economic  sort,  the  process  of  "economic 
causation  "  could  not  have  carried  a  value  so  far. 
It  is  the  living  emotion  that  counts !  Values  de- 
pend every  moment  upon  the  force  of  live  minds, 
and  need  to  be  constantly  renewed.  And  there 
would  have  been,  of  course,  many  "non-econo- 
mic" disturbances,  wars  and  robberies,  frauds  and 
benevolences,  political  and  religious  changes  — 
a  host  of  historical  occurrences  affecting  the 
weight  of  different  elements  in  society  in  a  way 
that,  by  historical  methods,  it  is  impossible  to 
treat  quantitatively.1 

1  Cf.  Davenport,  op.  cit.,  p.  560.  "For,  in  truth,  not  merely  the  distri- 
bution of  the  landed  and  other  instrumental,  income-commanding  wealth 
in  society,  but  also  the  distribution  of  general  purchasing  power  .  .  .  are, 
at  any  moment  in  society,  to  be  explained  only  by  appeal  to  a  long  and 


154  SOCIAL  VALUE 

What  is  called  for  is,  not  a  temporal  regressus, 
which,  starting  with  an  hypothesis,  picks  up  ab- 
stractions by  the  way,  and  tries  to  synthesize 
them  into  a  concrete  reality  of  to-day,  but  rather 
a  logical  analysis  of  existing  psychic  forces,  which 
shall  abstract  from  the  concrete  social  situation 
the  phases  that  are  most  significant.  This  method 
will  not  give  us  the  whole  story  either.  Value  will 
not  be  completely  explained  by  the  phases  we 
pick  out.  But  then,  we  shall  be  aware  of  the  fact 
and  we  shall  know  that  the  other  phases  are 
there,  ready  to  be  picked  out  as  they  are  needed, 
for  further  refinement  of  the  theory,  as  new  prob- 
lems call  for  further  refinement.  And,  indeed, 
we  shall  include  them  in  our  theory,  under  a 
lump  name,  namely,  the  rest  of  the  "presuppo- 
sitions" of  value. 

complex  history  [italics  mine],  a  distribution  resting,  no  doubt,  in  part 
upon  technological  value  productivity,  past  or  present,  but  in  part  also 
tracing  back  to  bad  institutions  of  property  rights  and  inheritance,  to 
bad  taxation,  to  class  privileges,  to  stock-exchange  manipulation  .  .  . 
and,  as  well,  to  every  sort  of  vested  right  in  iniquity.  .  .  .  Bid  there  being 
no  apparent  method  of  bringing  this  class  of  facts  within  the  orderly  sequences 
of  economic  law,  we  shall  —  perhaps  —  do  well  to  dismiss  them  from  our 
discussion.  .  .  ."  [Italics  are  mine.]  It  may  be  questioned  if  the  "orderly 
sequence"  is  worth  very  much  if  it  ignore  facts  so  decisive  as  these.  It 
is  precisely  this  sort  of  abstractionism  which  has  vitiated  so  much  of 
value  theory.  Most  economists  slur  over  the  omissions;  Professor  Daven- 
port, seeing  clearly  and  speaking  frankly,  makes  the  extent  of  the  ab- 
straction clear.  I  venture  to  suggest  that  the  reason  he  can  find  no  place 
for  facts  like  these  within  the  orderly  sequence  of  his  economic  theory  is 
that  he  lacks  an  adequate  sociological  theory  at  the  basis  of  his  economic 
theory.  A  historical  regressus  will  not,  of  course,  fit  in  in  any  logical  man- 
ner with  a  synthetic  theory  which  tries  to  construct  an  existing  situation 
out  of  existing  elements.  Our  plan  of  a  logical  analysis  of  existing  psychic 
forces  makes  it  possible  to  treat  these  facts  which  have  come  to  us  from 
the  past,  not  as  facts  of  different  nature  from  the  "utilities"  with  which 
the  value  theorists  have  dealt,  but  rather  as  fluid  psychic  forces,  of  the 
same  nature,  and  in  the  same  system,  as  those  "utilities." 


ECONOMIC  SOCIAL  VALUE  135 

Our  reason  for  choosing  a  logical  analysis  of 
existing  psychic  forces  instead  of  a  temporal  re- 
gressus  —  instead,  even,  of  an  accurate  historical 
study  of  the  past  —  is  a  twofold  one :  first,  we 
wish  to  coordinate  the  new  factors  we  are  to  em- 
phasize with  factors  already  recognized,  and  to 
emerge  with  a  value  concept  which  shall  serve 
the  economists  in  the  accustomed  way  —  it  is 
illogical  to  mix  a  logical  analysis  with  a  tem- 
poral regressus.  But,  more  fundamental  than  this 
logical  point,  is  this:  the  forces  which  have  his- 
torically begot  a  social  situation  are  not,  neces- 
sarily, the  forces  which  sustain  it.  The  rule  doubt- 
less is  that  new  institutions  have  to  win  their 
way  against  an  opposition  which  grows  simply 
out  of  the  fact  that  we  are,  through  mental  in- 
ertia, wedded  to  what  is  old  and  familiar.  We 
resist  the  new  as  the  new.  Even  those  who  are 
most  disposed  to  innovate  are  still  conservative,, 
with  reference  to  propaganda  that  they  them- 
selves are  not  concerned  with.  The  great  mass 
of  activities  of  all  men,  even  the  most  progres- 
sive, are  rooted  in  habit,  and  resist  change. 
When,  however,  a  new  value  has  won  its  way,  has 
become  familiar  and  established,  the  very  forces 
which  once  opposed  it  become  its  surest  support. 
Or,  waiving  this  unreflecting  inertia  of  society, 
as  things  become  actualized  they  are  seen  in 
new  relations.  What,  prior  to  experiment,  we 
thought  might  harm  us,  we  find  beneficial  after 
it  has  been  tried,  and  so  support  it  —  or  the 
reverse  may  be  true.  The  psychic  forces  main- 
taining and  controlling  a  social  situation,  there- 


136  SOCIAL  VALUE 

fore,  are  not  necessarily  the  ones  which  histori- 
cally brought  it  into  being.1 

We  turn,  therefore,  to  a  logical  analysis  of 
existing  social  psychic  forces  for  our  explanation 
of  social  economic  value,  and  for  the  explanation 
of  the  motivation  of  the  economic  activity  of 
society.  It  will  still  pay  us,  however,  to  halt  for 
a  moment  in  Wieser's  hypothetical  "natural" 
community,  for  we  shall  find  there  that  many  of 
the  concrete  complexities  which  he  sought  to 
eliminate  have  really  persisted  in  slight  disguise. 
Really  there  is  no  such  simplicity  as  Wieser  sup- 
poses. The  "natural"  society  has,  indeed,  no 
private  property,  or  differences  between  rich  and 
poor,  but  it  has,  none  the  less,  legal  and  ethical 
standards  of  distribution,  which  are  just  as  effi- 
cient in  the  determination  of  economic  values  as 
are  the  results  of  our  present  system  of  distri- 
bution. The  term,  "natural,"  has  misled  Wieser, 
when  it  leads  him  to  say  that  marginal  utility 
alone  will  rule.  For  "natural"  here  means,  not 
"simple,"  but  "ethically  ideal."  The  word  has 
—  as  Wieser  and  others  who  have  used  it  often 
fail  to  see  —  a  positive  connotation  of  its  own :  a 
definite  set  of  legal  and  ethical  values  are  bound 
up  in  it  in  this  case.  That  such  a  society  should 
exist,  and  that  in  it  "marginal  utility"  should 
be  the  only  variable  affecting  value  (apart  from 
the  limitations  of  physical  nature),  implies  the 
legal  rule  of  equality  in  distribution,  and  such 
a  set  of  moral  values  actually  ruling  the  behavior 

1  I  do  not,  of  course,  mean  to  question  the  immense  light  which  his- 
tory throws  upon  the  nature  of  existing  social  forces. 


ECONOMIC  SOCIAL  VALUE  137 

of  the  people  as  to  make  this  legal  rule  effective, 
—  or  else  the  most  extraordinary  activity  on  the 
part  of  the  government  to  maintain  the  rule. 
Wieser  himself  fails  to  see  this,  for  he  concedes 
that  the  "moral"  principle  of  distribution  in 
such  a  society  would  recognize  the  superior  merits 
of  the  leaders  who  furnish  ideas  and  direction, 
as  entitling  them  to  a  higher  reward  than  the 
merely  mechanical  laborers.1  But  this,  it  is  evi- 
dent, would  give  them  an  excess  of  that  same 
vexatious  "purchasing  power"2  —  whether  em- 
bodied in  gold  or  commodities  or  labor-checks 
matters  little  —  and  so  would  destroy  the  effi- 
ciency of  the  principle  of  "marginal  utility"  as 
the  ruler  of  values. 

As  phases  in  the  "presuppositions  "  of  economic 
value,  then,  coordinate  with  "marginal  utility," 
our  theory  puts  the  legal  and  ethical  values  con- 
cerned with  distribution,  which  rule  in  a  com- 
munity at  a  given  time.  Reinforcing  and  vali- 
dating the  values  of  goods  are  the  social  values  of 
men.  President  F.  A.  Walker3  defines  value  as 
"the  power  an  article  confers  upon  its  possessor 
irrespective  of  legal  authority  or  personal  senti- 
ments., of  commanding,  in  exchange  for  itself, 
the  labor,  or  the  products  of  the  labor,  of  others." 
[Italics  are  mine.]  In  our  view,  this  definition 
is  precisely  wrong.  A  change  in  laws  or  in  morals 
respecting  the  social  ranking  of  men,  respecting 
property  rights,  will  at  once  affect  economic 
values.  Earlier  economists  often  wrote  as  if 

1  Wieser,  op.  cit.,  pp.  79-80.  *  Ibid.,  p.  62. 

1  Pol.  Econ.,  1888  edition,  p.  5. 


138  SOCIAL  VALUE 

distribution  were  primarily  a  physically  deter- 
mined matter,  and  so  we  got  from  them  an  "Iron 
Law  of  Wages,"  etc.  But  it  is  pertinent  to  quote 
from  one  who,  though  in  many  ways  allied  to  the 
older  school,  and  in  value  theory  avowedly  their 
follower,  still  stands  as  a  bridge  between  the 
theories  I  am  criticizing  and  my  own.  John 
Stuart  Mill 1  says :  — 

The  laws  and  conditions  of  the  production  of  wealth, 
partake  of  the  character  of  physical  truths.  There  is 
nothing  optional  or  arbitrary  in  them.  ...  It  is  not  so 
with  the  Distribution  of  Wealth.  That  is  a  matter  of 
human  institution  solely.  The  things  once  there,  mankind, 
individually  or  collectively,  can  do  with  them  as  they  like. 
They  can  place  them  at  the  disposal  of  whomsoever  they 
please,  and  on  whatever  terms.  Further,  in  the  social  state, 
in  every  state  except  total  solitude,  any  disposal  whatever 
of  them  can  only  take  place  by  the  consent  of  society,  or 
rather  of  those  who  dispose  of  its  active  force.  Even  what 
a  person  has  produced  by  his  individual  toil,  unaided  by  any 
one,  he  cannot  keep,  unless  by  the  permission  of  society. 
Not  only  can  society  take  it  from  him,  but  individuals 
could  and  would  take  it  from  him,  if  society  only  remained 
passive;  if  it  did  not  either  interfere  en  masse,  or  employ 
and  pay  people  for  the  purpose  of  preventing  him  from 
being  disturbed  in  the  possession.  The  distribution  of 
wealth,  therefore,  depends  on  the  laws  and  customs  of 
society.  The  rules  by  which  it  is  determined,  are  what  the 
opinions  and  feelings  of  the  ruling  portion  of  the  commu- 
nity make  them,  and  are  very  different  in  different  ages  and 
countries;  and  might  be  still  more  different,  if  mankind  so 
chose. 

The  distribution  of  wealth,  then,  depends  on 
social  psychic  forces.  And  among  these  are  the 
social,  ethical  and  legal  values  of  men  and  of  so- 

1  Principles,  bk.  n,  chap.  i. 


ECONOMIC  SOCIAL  VALUE  139 

cial  classes.  Economists  of  an  earlier  school  took 
these  factors  for  granted,  when  they  thought 
of  them  at  all,  and  assumed  that  they  are  con- 
stant, relatively  unchangeable  things,  a  sort  of 
fixed  framework  within  which  the  forces  of  a 
Malthusian  biology,  or  the  forces  of  "self -inter- 
est'* might  work.  Commonly,  indeed,  they 
thought  of  them  not  at  all,  and  wrote  as  if  the 
factors  which  they  allowed  to  vary  told  the  whole 
story.  Such  is,  indeed,  still  the  procedure,  in 
our  present  day  " pure  economic"  theories  of  dis- 
tribution, which  either  exclude  the  non-economic 
factors,1  or  else  relegate  them  to  the  "pound 

1  Professor  Clark  seems  to  desire  to  exclude  all  phases  of  social  life 
except  the  "pure  economic,"  from  his  static  conception,  as  indicated  by 
the  footnote  which  follows,  taken  from  page  76  of  his  Distribution  of 
Wealth  :  "  The  statement  made  in  the  foregoing  chapters  that  a  static 
state  excludes  true  entrepreneurs'  profits  does  not  deny  that  a  legal 
monopoly  might  secure  to  an  entrepreneur  a  profit  that  would  be  as  per- 
manent as  the  law  that  should  create  it  —  and  that,  too,  in  a  social  con- 
dition which,  at  first  glance,  might  appear  to  be  static.  The  agents,  labor 
and  capital,  would  be  prevented  from  moving  into  the  favored  industry, 
though  economic  forces,  if  they  had  been  left  unhindered,  would  have 
caused  them  to  move  to  it.  This  condition,  however,  is  not  a  true  static 
state,  as  it  has  here  been  defined.  Such  a  genuine  static  state  has  been 
likened  to  that  of  a  body  of  tranquil  water,  which  is  held  motionless  solely 
by  an  equilibrium  of  forces.  It  is  not  frozen  into  fixity;  but  as  each  par- 
ticle is  impelled  in  all  directions  by  the  same  amounts  of  force,  it  retains 
a  fixed  position.  There  is  a  perfect  fluidity,  but  no  flow  ;  and  in  like  manner 
the  industrial  groups  are  in  a  truly  static  state  when  the  industrial  agents, 
labor  and  capital,  show  a  perfect  mobility,  but  no  motion.  A  legal  monopoly 
destroys  at  a  certain  point  this  mobility  [so  would  a  law  forbidding  the 
manufacture  of,  say,  opium  or  liquor,  or  any  law  or  moral  force  that 
prevents  the  individual's  using  his  labor  and  capital  in  the  manner  most 
advantageous  to  himself  regardless  of  public  consequences],  and  is  to  be 
treated  as  an  element  of  obstruction  or  of  friction  that  is  so  powerful  as 
not  merely  to  retard  a  movement  that  an  economic  force,  if  unhindered, 
would  cause,  but  to  prevent  the  movement  altogether."  This  would  seem 
to  leave  economic  forces  working  in  vacua  in  Professor  Clark's  static 
state  —  if  "unhindered"  is  to  be  taken  literally.  It  is  probably  a  juster 
interpretation,  however,  to  hold  that  Professor  Clark  has  in  mind  a  con- 


140  SOCIAL  VALUE 

of  'cceteris  paribus.'"  l  If  ours  were  a  stagnant 
civilization,  this  procedure  might  be  safe,  but 

stant  legal  situation,  in  which  absolutely  free  competition  is  assured  by 
law.  But  even  in  his  scheme  for  an  economic  dynamics,  there  is  no  place 
for  legal  or  ethical  changes.  There  are  five  general  sets  of  dynamic 
changes  which  Professor  Clark  mentions,  whose  operation  is  to  constitute 
the  subject  matter  of  economic  dynamics.  They  are  (Essentials,  p.  131, 
and  Distribution,  pp.  56  et  seq.):  (1)  population  increases;  (2)  capital  in- 
creases; (3)  methods  of  production  change;  (4)  new  modes  of  organizing 
industry  come  into  vogue;  (5)  the  wants  of  men  change  and  multiply. 
These  five  categories  are  all,  primarily,  at  least,  economic  in  character. 
While  legal  and  ethical  changes  would  doubtless  influence  them,  they  cer- 
tainly cannot  comprehend  the  full  influence  of  these  legal  and  ethical 
changes,  especially  those  affecting  the  ranking  of  men,  and  the  distribution 
of  wealth.  There  seems  to  be  a  marked  difference  between  Professor 
Clark's  point  of  view  in  his  Distribution  of  Wealth  and  that  of  his  earlier 
Philosophy  of  Wealth,  and  I  must  confess  my  preference  for  the  earlier 
point  of  view.  In  saying  this,  of  course,  I  am  far  from  impeaching  the 
masterly  economic  analysis  which  the  later  book  contains  —  rather,  I  join 
heartily  in  the  general  estimate  which  counts  that  book  as  of  altogether 
epoch-marking  significance.  My  point  is,  rather,  as  will  be  indicated  more 
fully  in  the  chapters  on  the  relation  between  value-theory  and  price-the- 
ory, that  the  presuppositions  and  significance  of  such  a  study  as  Professor 
Clark's  need  clarification  and  interpretation  in  the  light  of  a  theory  of 
value  which  takes  account  of  the  rich  complexity  of  social  life. 

Professor  Joseph  Schumpeter,  of  Vienna,  carries  out  economic  abstrac- 
tionism to  its  logical  limits,  both  in  "statics"  and  in  "dynamics."  For 
an  estimate  of  his  statics,  vide  Professor  Alvin  S.  Johnson's  review  of 
Schumpeter's  Das  Wesen  und  der  Hauptinhalt  der  theoretischen  Nationald- 
konomie  (Leipzig,  1908),  in  the  Journal  of  Political  Economy,  1909,  pp.  363 
et  seq.  His  dynamics  is  also  to  be  "  reinvnrtschaftlich."  An  essay  in  economic 
dynamics,  the  introduction  to  which  sets  forth  his  general  point  of  view, 
appears  in  the  Austrian  Zeitschrift  fur  Volksunrtschaft,  etc.,  1910,  under 
the  title,  "Das  Wesen  der  Wirtschaftskrisen."  In  this  Professor  Schum- 
peter narrows,  by  a  process  of  exclusion,  the  conception  of  what  would 
constitute  a  "pure  economic"  explanation  of  crises  virtually  to  a  pin- 
point —  and  then  fails  to  carry  out  his  program  of  giving  us  a  "rein- 
wirtschaftlich"  theory.  For,  in  order  to  get  any  periodicity  into  his  eco- 
nomic movement,  he  is  obliged  to  bring  in,  from  the  field  of  sociological 
theory,  the  factor  of  imitation  —  he  does  not  use  the  term,  imitation, 
though  he  does  use  the  verb,  "kopieren"  (Videesp.  pp.  298-99.)  Pro- 
fessor Schumpeter  very  explicitly  recognizes  the  existence  of  factors  other 
than  the  " reinunrtschaftlich,"  but  counts  them  as  "external"  factors. 

1  Cf.  Professor  Marshall's  discussions  in  his  sections  on  economic  law 
and  method,  and  Professor  Davenport's  classification  of  the  factors  in 
the  economic  environment  (Value  and  Distribution,  pp.  514-15). 


ECONOMIC  SOCIAL  VALUE  141 

in  a  highly  "dynamic"  society,  where  laws, 
morals,  class  relations,  the  very  fundamentals 
of  organization,  are  being  made  the  subjects  of 
scrutiny,  agitation,  class  struggle,  etc.,  are  being 
subjected  to  "transvaluations,"  and  are  continu- 
ally changing  them  with  the  principles,  machin- 
ery and  results  of  distribution,  and  so  one  of  the 
biggest  factors  lying  back  of  economic  values, 
no  study  of  value  can  afford  to  ignore  them. 

It  is  of  course  recognized  that  a  purely  ethical 
and  legal  theory  of  distribution  would  be  as 
much  an  abstraction  as  the  " reinwirtschaftlich" 
theory  of  distribution  —  and  probably  a  much 
less  useful  abstraction.  Either  abstraction  is 
legitimate,  if  it  do  not  seek  to  abolish  the  other 
factors.  We  may  safely  enough  define  a  set  of 
legal  and  moral  values,  concerned  with  the  or- 
ganization of  society  and  industry,  and,  assum- 
ing them  constant,  a  sort  of  frozen  framework, 
let  man's  values  with  reference  to  the  immediate 
consumption  and  production  of  economic  goods 
("utilities  and  costs"  in  current  phrase)  vary, 
and  see  what  the  consequences,  both  on  the 
ranking  of  men,  and  the  ranking  of  goods,  will 
be.  Or,  assuming  "utilities  and  costs"  constant, 
we  may  let  the  legal  and  moral  values  vary,  and 
see  what  consequences  would  follow.  Or,  assum- 
ing all  other  factors  constant,  we  may  vary  the 
size  of  the  population,  or  vary  the  proportions 
between  labor  and  productive  instruments,  or 
between  land  and  population,  or  pick  out  any 
other  factor  of  the  concrete  situation  we  happen 
to  be  interested  in,  as  the  "standard  of  living," 


142  SOCIAL  VALUE 

and  let  it  change,  and  see  what  consequences 
flow  therefrom.  But,  in  doing  this,  we  must  not 
forget  that  the  other  factors  remain  essential, 
equally  potent  in  the  general  situation  with  the 
one  on  which  we  have  centred  our  attention. 
And  we  must  not  forget  that  changes  in  one  fac- 
tor, while  we  may  in  thought  allow  it  to  occur 
alone,  cannot  occur  without  bringing  in  changes 
in  the  others  as  well.  An  increase  in  the  number 
of  laborers,  e.g.,  may  also  mean  an  increase  of 
voters  of  a  given  political  tendency,  and  may  mean 
a  change  in  the  political  power  of  classes,  and  a 
change  in  the  laws.  And  it  may  be  tremendously 
significant  whether  the  increased  number  of 
laborers  consists  of  Irish  Catholics,  or  of  Rus- 
sian Jews,  or  of  native  Americans,  or  of  negroes, 
—  significant  from  the  standpoint  of  distribu- 
tion, of  the  values  of  economic  goods,  and  the 
direction  of  economic  activity.1  Reduce  your 
labor  force  to  "efficiency  units,"  so  that  from 
the  standpoint  of  productive  power  of  the  addi- 
tions no  difference  is  made  whether  they  be  of  the 
one  class  or  the  other,  and  still  it  is  a  matter  of 

1  The  danger  of  the  abstract  individualistic  study,  from  the  entre- 
preneur's viewpoint  —  a  useful  enough  method  within  limits  —  is  well 
illustrated  by  Professor  Davenport's  contention  that  "men  as  employees 
are  passive  facts,  mere  agents  under  the  direction  of  managing  pro- 
ducers, and  are  therefore  only  potentially  directing  forces.  The  problem 
of  production  and  of  marginalship  is,  accordingly,  an  entrepreneur  prob- 
lem." (Op.  cit.,  p.  279,  n.)  This  is  set  forth  as  a  limitation  on  the  doctrine, 
stated  in  the  paragraph  which  precedes  it,  that  "man  is  to  be  conceived 
as  the  subject  and  centre  of  economic  science,  etc."  Surely  Professor 
Davenport's  contention  is  an  impossible  abstraction  from  the  rich  facts 
of  social  control.  The  managing  entrepreneur  knows  better,  when  he 
deals  with  union  rules  and  walking  delegates.  And  the  economist,  trac- 
ing the  subtler  forces  that  underlie  values,  and  so  motivate  the  direction 
of  industry,  should  know  more,  rather  than  less,  than  the  entrepreneur. 


ECONOMIC  SOCIAL  VALUE  143 

consequence,  from  the  standpoint  of  distribution, 
and  ultimately  of  the  values  of  goods,  whether 
they  belong  to  one  class  or  the  other.  One  sort 
of  laborer  may  be  capable  of  efficient  labor- 
union  organization,  with  the  result  that  a  large 
share  of  the  product  goes  to  labor.  Another  sort 
of  laborer  may  be  incapable  of  much  organiza- 
tion, may  work  at  cross-purposes  with  the  rest 
of  the  labor  force,  and  may  be  an  easy  victim 
of  exploitation.  "Other  things  equal,"  we  may 
concede  that  productive  efficiency,  or  "standard 
of  living,"  or  other  abstract  principle,  deter- 
mines the  share  that  goes  to  labor  —  but  many 
indeed  are  "the  other  things."  The  distribution 
of  wealth  is  not  an  "arbitrary"  matter  —  if  by 
that  it  be  meant  that  no  scientific  laws  can  be 
worked  out  to  describe  it.  Mill  himself  would  be 
first  to  protest  against  any  metaphysical  "free- 
dom of  the  will"  here.  But  it  is  a  matter  into 
which  law  and  morals  and  personal  friendship 
and  monopoly  privilege  and  charity  and  benevo- 
lence and  statesmanlike  purpose  and  selfish 
struggle  —  in  a  word,  the  whole  intermental  life 
of  men  in  society  —  are  involved.  And  any 
principle  of  distribution  that  we  may  select  is 
only  true,  not  only  if  other  things  are  "equal," 
but  also  if  other  things  are  in  a  particular  set 
of  relations.  We  have  seen  the  assumptions  of  a 
non -economic  sort  that  are  implicit  in  Wieser's 
conception  of  a  "natural  society."  It  may  be 
interesting  to  note  what  is  involved  in  the  situa- 
tion which  Professor  Clark  treats  in  his  Dis- 
tribution of  Wealth.  That  his  system  should  hold, 


144  SOCIAL  VALUE 

we  must  have,  of  course,  private  property,  and 
personal  freedom.  We  must  have  perfectly  free 
competition.  We  must  have  absolutely  no  mono- 
poly privilege  of  any  sort.  We  must  have  such 
rapid  and  free  communication  of  ideas  that  no 
monopoly  of  knowledge  should  exist.  But 
imagine  the  moral  values  that  must  rule  in  a  so- 
ciety where  such  a  situation  holds!  How  are 
men  to  be  prevented  from  getting  monopolies? 
How  prevent  laws  in  the  interests  of  the  alert 
and  influential?  How  prevent  the  monopoly  of 
ideas?  A  very  different  moral  situation  must  ob- 
tain in  such  a  society  from  that  we  know.  And  a 
very  different  system  of  laws.  In  saying  this,  of 
course,  I  say  nothing  that  was  not  obvious  enough 
to  Professor  Clark  when  he  constructed  his  system 
on  the  basis  of  "heroic  abstraction,"  but  still 
it  cannot  be  neglected.  Not  every  one  who  has 
undertaken  to  interpret  Professor  Clark,  and  to 
make  practical  application  of  his  theories,  has 
seen  these  limitations. 

Or,  again,  what  does  the  system  of  competi- 
tion mean?  Why  do  we  have  such  varied  esti- 
mates from  different  writers?  Why  do  some  see 
in  it  a  benevolent  influence,  while  for  others  it 
is  a  ghastly  nightmare?  The  answer  is,  I  think, 
that  competition  is  an  abstraction,  which  each 
makes  in  his  own  way.  If  we  look  on  compe- 
tition as  a  system  where  each  is  free  to  follow 
his  "pure  economic"  tendencies  in  the  short- 
est and  simplest  manner,  I  think  there  can  be 
no  question  but  that  we  must  condemn  it. 
The  "pure  economic  impulse,"  namely,  the  im- 


ECONOMIC  SOCIAL  VALUE  145 

pulse  to  get  the  maximum  of  wealth  with  the 
minimum  of  effort,  left  unchecked  and  un- 
guided  by  any  other  social  forces,  would  lead, 
by  the  shortest  and  simplest  path,  to  theft, 
robbery,  and  murder.  They  are  easier  than  work ! 
And  more  sensible  than  work,  if  one  be  "rein- 
wirtschaftlich"  and  live  in  a  society  where  there 
is  little  chance  that  he  who  creates  wealth  will 
enjoy  it.  Or,  partly  checked  by  social  constraints 
(thinking  of  these  as  "external"  matters  solely), 
the  "economic  tendency"  may  lead  —  as  it  has 
led  —  to  the  dynamiting  of  rival  plants,  to  the 
securing  of  preferential  rates  from  common 
carriers,  to  the  corrupting  of  legislatures  and 
judges,  to  the  spreading  of  false  rumors,  etc. 
On  the  other  hand,  if  the  "rules  of  the  game" 
are  high,  if  competition  be  limited  to  doing  things 
which  result  in  a  better  commodity  with  a  de- 
creased outlay  of  human  effort  and  physical  re- 
sources, and  with  kindly  feeling  among  com- 
petitors (or  even  without  this  last),  we  may  see 
in  it  a  great  source  of  justice  and  progress.  It 
all  depends  on  what  Professor  Seligman  calls 
the  "level  of  competition."  1  That  is  to  say,  it 
depends  on  the  extent  to  which  the  system  in- 
cludes factors  of  moral,  legal  and  social  nature, 
other  than  the  "pure  economic" — a  thing  "that 
never  was  on  land  or  sea." 

And  what  shall  we  say  of  "inevitable  economic 
tendencies"?  A  good  many  of  them  —  leading 
in  diverse  directions  —  have  appeared  in  the 
literature  of  economics.  On  the  one  hand,  in- 

1  Principles,  1905  ed.,  pp.  147  et  seq. 


146  SOCIAL  VALUE 

evitable  tendencies  towards  a  divine  "economic 
harmony."  On  the  other  hand,  inevitable  ten- 
dencies toward  monopoly;  toward  ever  more 
numerous  panics;  toward  greater  concentration 
of  wealth;  toward  proletarian  misery  of  an  ever 
more  hopeless  sort  —  all  bringing  us  finally  to 
a  socialistic  state.  I  see  no  inevitable  economic 
tendencies  anywhere.  The  "economic  motive," 
as  already  indicated,  if  left  free  to  work  in  vacuo, 
'  would  lead  us  to  anarchy.  But  it  does  n't  work 
in  vacuo.  And  the  question  as  to  where  the  in- 
finite complex  of  social  forces  may  lead  us  is 
not  one  that  can  be  settled  "  reinwirtschqftlich." 
We  can  only  say  that  economic  values,  at  a  given 
moment,  are  the  focaj  points  at  which  the  laws 
and  moral  values  and  loves  and  hates,  and 
"utilities"  and  "costs"  directly  connected  with 
economic  goods,  and  the  multitudinous  other 
values  of  concrete  social  life  exert  their  moti- 
vating influence  on  the  economic  activities  of 
society.  Then,  given  these  economic  values,  and 
assuming  that  they  alone  are  of  significance  for 
the  activity  of  society,  we  may  see  where  they 
would  lead  us.  But  we  should  still  be  in  a  world 
of  abstractions  if  we  did  so.  For  the  economic 
social  values  do  not  exhaust  the  social  forces  of 
motivation.  Very  much  of  social  activity  is  non- 
economic  in  character.  And  the  force  of  a  given 
moral  value  —  say  that  of  elevating  the  condi- 
tion of  a  degraded  class — may  be  divided,  tend- 
ing indirectly  by  raising  the  value  of  a  certain 
sort  of  economic  good,  to  encourage  its  produc- 
tion, and  tending  directly  to  prevent  its  pro- 


ECONOMIC  SOCIAL  VALUE  147 

duction.  Let  us  assume,  for  example,  that  this 
moral  value  leads  to  an  increase  in  the  income  of 
'the  degraded  class,  and  so  tends  to  increase  the 
demand  for  liquor;  but  assume,  further,  that 
this  same  moraljyalue  is  the  force  leading  to  a 
prohibition  law,  that  forbids  the  production  and 
sale  of  liquor.  Ethical,  religious,  legal,  esthetic, 
and  other  values  may  indirectly  motivate  the 
economic  activity  of  men  through  entering  into 
economic  values,  or  they  may  directly,  in  their 
own  form,  antagonize  these  economic  values,  by 
constraining  those  who  do  not  "participate"  in 
them,  and  by  impelling  those  who  do  feel  them 
to  activities  in  lines  other  than  those  where  the 
greatest  surplus  of  economic  value  is  to  be  gained. 
Even,  then,  though  we  have  a  theory  of  econ- 
omic value  which  includes  these  other  social 
forces,  we  have  no  right  to  speak  of  "inevitable 
economic  tendencies."  Socialjife  is  one  organic 
whole.  There  is  no  phase  of  social  activity  which 
is  wholly  directed  by  one  set  of  values,  and  there 
is  no  one  set  of  values  that  exclusively  depends 
on  one  sort  of  motive.  And  when  we  give  exclu- 
sive attention,  in  our  study,  to  one  set  of  values, 
as  it  is  often  necessary  to  do,  we  must  recognize 
that  we  are  handling  an  abstraction,  that  the 
other  forces  remain,  and  must  be  dealt  with  before 
our  conclusions  have  any  validity  for  practice. 


CHAPTER  XIV 

ECONOMIC  SOCIAL  VALUE  (continued) 

BACK  to  the  concrete  whole,  then,  of  social-men- 
tal life.  The  abstract  elements  with  which  the 
Austrians  and  the  pain-abstinence  cost  school 
undertook  to  solve  the  value  problem,  have  their 
place  in  this  whole.  The  "utility"  of  goods  to 
individuals,  growing  out  of  the  nature  of  their 
wants,  depends  very  largely  on  social  causes. 
Mode,1  fashion,  custom  —  how  powerfully  they 
mould  our  wants.  And  individual  "cost,"  like- 
wise: a  university  athlete  could  dig  a  ditch  far 
more  easily,  so  far  as  bodily  pain  is  concerned, 
than  could  an  aged  negro,  and  yet  would  suffer 
much  more  in  doing  it  than  would  the  negro. 
A  social  standard  would  bring  a  feeling  of  shame 
to  him  which  the  negro  would  not  share.  If  we 
abstract  from  the  concrete  forms  which  individ- 
ual wants  and  "costs"  take,  and  define  them 
in  their  lowest  physical  terms,  we  might  leave 
out  a  social  reference.  But  men  do  not  desire 
'  raw  meat,  and  the  skins  of  beasts,  and  caves  in 
which  to  live.  Their  food  they  wish  to  eat  in 
accordance  with  the  conventions  of  their  class, 
and  of  a  sort  that  their  fellows  eat,  their  water, 
of  late,  they  wish  free  from  germs,  their  houses 

1  Vide  Ross,  Foundations  of  Sociology,  chapter  on  the  "Sociological 
Frontier  of  Economics,"  and  Tarde,  Psychologic  Economique,  passim. 


ECONOMIC  SOCIAL  VALUE  149 

and  clothing  must  be  "in  style," — facts  well 
enough  recognized,  though  not  in  themselves 
enough  for  a  theory  of  "social  value."  These 
individual  "utilities"  and  "costs"  have  little 
meaning  till  we  know  the  sociaj  ranging  of  the 
men  who  feel  them,  till  we  know  how  much  the 
men  who  have  them  count  for  in  the  scale  of  fun- 
damental human  values.  2thd  their  effect  on  "sup- 
ply price"  and  "demand  price"  —  the  money 
measures  of  infinitely  complex  social  forces,  to 
which  the  entrepreneur  immediately  looks  for  his 
"cue"  — has  absolutely  no  constant  relation  to 
their  intensity.  The  wants  of  slaves  may  count  for 
little.  The  utterly  unattractive  and  inefficient  man 
may  starve.  The  gilded  parasite  of  a  prerevo- 
lutionary  French  monarch  may  command  untold 
resources,  while  the  useful  and  productive  mil- 
lions may  barely  exist.  On  the  other  hand,  with 
a  changed  set  of  legal  and  moral  values,  we  may 
have  men  of  social  influence  and  power  striving 
constantly  to  increase  the  incomes  and  relieve 
the  sufferings  of  the  poor  and  helpless.  Our 
legislatures  may  be  busy  with  lajsvs  shortening 
the  hours  of  all  labor,  laws  prohibiting  child  labor, 
laws  restricting  the  labor  of  women,  laws  for  the 
protection  of  miners,  laws  relating  to  the  condi- 
tions of  pay  for  labor  and  to  compensation  for 
accidents  —  which  promptly  reflect  themselves 
in  the  values  of  the  goods  produced  in  the  indus- 
tries affected,  and  in  the  increased  values  — 
through  increased  "demand "  — of  the  goods  con- 
sumed by  these  classes. 
The  ideal  of  "no  pay  without  function"  may 


150  SOCIAL  VALUE 

attain  —  as  I  think  it  is  to-day  attaining  —  a 
value  of  increasing  power.  And  it  may  lead  men 
to  strive  for  the  abolition  of  monopoly  incomes, 
and  the  correction  of  the  gross  inequalities  in 
the  distribution  of  wealth.  If  it  do  not  succeed 

—  and  it  does  not  by  any  means  succeed  —  it 
is  because  opposing  values  check  it.  At  any  given 
moment,  there  is  an  equilibrium,  usually  un- 
stable, between  the  forces  tending  to  correct, 
and  to  perpetuate,  these  inequalities.     And  it 
need  not  be  an  evil  force  that  is  the  real  obstacle 
to  the  realization  of  greater  justice  in  distribu- 
tion. The  legal  value  of  private  property  —  one 
of  those  social  "absolute  values"  which  do  not 
readily  lend  themselves  to  the  "marginal  pro- 
cess" —  checks  at  an  early  stage  many  of  our 
well-meant,  but  badly  planned,  efforts  at  justice. 
Glad  as  most  of  us  would  be  to  deprive  pluto- 
cratic pirates  of  what  they  have  not  earned,  we 
still  do  not  care  to  upset  the  fundamentals  of 
our  social  system  in  the  process.    But  the  con- 
flict between  these  values  brings  them  both  into 
clearer  light.    We  see,  and  feel,  the  significance, 
the  "presuppositions,"  the  "funded  meanings," 
of  each.    And  while,  for  the  present,  there  is  a 
"mechanical  haul  and  strain"  between  them, 
which,  if  no  more  light  comes,  may  ultimately 
lead  to  the  triumph  of  one  and  the  complete  de- 
feat of  the  other,  still,  we  may  hope  to  get  a  result 
like  that  which  often  comes  in  the  case  of  con- 
flicts between  values  in  the  individual  psychology 

—  a  fuller  appreciation  of  the  significance  of 
both  values,  which  will  get  us  away  from  the 


ECONOMIC  SOCIAL  VALUE  151 

"absoluteness"  of  each,  and  effect  a  marginal 
equilibrium  between  them,  or,  perhaps,  get  a 
new  value  which  will  comprehend  them  both. 
Of  course,  the  thing  is  not  so  simple  as  this.  It 
is  not  a  conflict  simply  between  two  values,  both 
of  which  the  same  man  may  "participate"  in. 
Our  plutocrats  are  also  parts  of  the  social  will. 
They  count!  The  economic  value  they  control 
may  bribe  lawmakers,  may  corrupt  judges,  may 
seduce  writers  and  preachers  and  teachers  and 
others  who  have  to  do  with  the  making  of  public 
sentiment  and  the  shaping  of  social  values.  And, 
in  subtler  ways,  through  the  social  prestige 
which  their  mere  wealth  too  often  gives,  through 
the  ideals  which  they  themselves  honestly  feel, 
and  communicate  to  those  about  them,  do  they 
create  values  opposing  the  values  making  for 
a  juster  distribution  of  wealth.  Infinitely  com-\ 
plex  is  the  situation,  many  and  varied  are  the 
values,  which  reinforce  each  other,  oppose  each 
other,  and  come  into  equilibrium  with  each  other, 
in  a  given  moment  in  the  social  will. 

Older  egoistic  theories  of  political  economy, 
which  assumed  perfect  freedom  of  competition, 
and  gloried  in  the  "harmonies"  which  result 
therefrom,  whereby  the  interests  of  the  individ- 
uals and  of  society  converge,  and  the  maximum  of 
social  welfare  is  attained  by  the  individual's  at- 
taining his  own  interests  —  these  theories  have 
been  much  attacked  of  late  by  those  who  accept 
the  premise  of  egoism,  but  reject  the  premise  of 
freedom.  To  them  economic  "friction"  means 
simply  an  opportunity  for  the  strong  to  prey  upon 


152  SOCIAL  VALUE 

the  weak,  and  the  social  outlook  is  gloomy  in- 
deed. The  harmonies  are  shattered  and  gone. 
If  we  reject  the  other  premise  also,  however,  as 
necessarily  a  dominant  principle,  the  outlook 
is  changed  or  may  be  changed.  It  is  true  that 
there  are  ignorance,  helplessness,  and  passions 
among  men,  and  that  wolves  prey.  But  it  is 
also  true  that  there  are  forces  of  righteousness 
alert  and  militant  in  the  world,  not  merely  in  the 
pulpit  and  cloister  and  missionary  field.  And 
the  struggle  between  these  contending  forces  is 
pregnant  with  implications  for  value  theory.  An 
astute  corporation  lawyer  argues  before  a  court; 
an  honest  attorney-general  defends  the  rights  of 
the  people;  and  the  ticker  on  'Change  records 
whether  right  or  wrong  has  prevailed.  Prices 
are  big  with  the  moral  tidings  they  would  speak 
—  shall  we  read  in  them  only  mathematical 
ratios  between  quantities  of  physical  objects? 

It  is  by  turning,  then,  to  the  concrete  whole 
of  social-mental  life,  and  especially  to  the  moral 
and  legal  values  of  distribution,  that  we  break 
the  circle  1  of  our  economic  values.  Economics 

1  It  may  be  objected  that  instead  of  "breaking  the  circle,"  we  have 
simply  widened  it  —  that  economic  values,  working  through  other  forms 
of  value,  affect  other  economic  values  still.  In  a  sense,  of  course,  this  is 
true.  In  any  truly  organic  situation,  we  have  the  phenomenon  of  recip- 
rocal causation.  An  organic  situation  must  be  circular  in  this  sense.  The 
parts  are  interdependent.  And  our  objection  to  the  theories  criticized  is 
based  on  the  fact  that  they  are  essentially  efforts  to  describe  a  process  in 
rectilinear  causation  —  in  the  case  of  the  Austrians,  e.  g.,  the  process  is 
from  subjective  utility,  to  objective  value  of  consumption  goods,  then  to 
the  values  of  the  production  goods  of  the  nearest  rank,  and  then  on  and  on 
to  goods  of  remoter  ranks,  etc.  Bohm-Bawerk  recognizes  very  well  that 
the  charge  of  circular  reasoning,  if  it  could  be  brought  home  to  the  Aus- 
trians, would  vitiate  their  system.  Vide  "Grundziige,"  Conrad's  Jahr- 
bucher,  1886,  p.  516.  And  Professor  Clark  likewise  recognizes  that  value 


ECONOMIC  SOCIAL  VALUE  153 

has  failed  to  profit  by  the  example  of  the  other 
social  sciences  here.  Ethics  has  frankly  recog- 
nized the  tremendous  import  of  economic  values 
for  ethical  values.  Jurisprudence  has  frankly 
accepted  the  fact  that  law  grows,  in  large  part, 
out  of  economic  needs  —  even  though  it  remains 
behind  the  needs  of  the  present  economic  situa- 
tion. But  economic  theory  has  sought  to  make 
itself  too  much  a  thing  apart,  to  isolate  its  phe- 
nomena from  other  phases  of  social  life,  and  has 
busied  itself  exclusively  with  "utility  "and  "cost" 
and  "prices,"  and  the  like.  And  where  the  eco- 
nomist has  consented  to  consider  the  relations 
between  his  own  field  and  adjacent  fields,  he  has 
done  so  with  a  preconception  of  the  priority  of 
his  own  phenomena,  and  his  results  have  been 
an  "economic"  interpretation  of  history,  ethics, 
jurisprudence,  etc.  That  the  economic  inter- 
pretation of  the  other  fields  has  much  to  com- 
mend it  is  certain,  but  it  is  equally  certain  that 
law  and  morality  react  on  economic  values,  es- 
pecially in  the  higher  stages  of  civilization.  This 
has  been  so  fully  and  convincingly  stated  by 
Professor  Seligman,  in  his  Economic  Interpreta- 
tion of  History,  that  I  forego  further  elaboration 
here.  One  comment  is  necessary  however:  even 
though  we  might  grant  Marx  and  Buckle  that 
the  physical  environment  and  the  progress  of 

theory  of  the  sort  he  is  treating  is  spoiled  by  circular  reasoning,  as  indi- 
cated by  his  criticism  of  a  certain  form  of  the  labor  theory  in  his  Distribu- 
tion of  Wealth,  p.  397.  Whenever  a  small  set  of  abstractions  is  picked  out, 
as  the  source  and  cause  of  the  rest  of  a  movement,  such  a  process  of  recti- 
linear causation  is  implied.  And  a  rectilinear  process  has  no  right  to  get 
into  a  circle! 


154  SOCIAL  VALUE 

economic  technique  are  of  ultimate  ruling  sig- 
nificance for  the  direction  of  social  progress,  it 
is  still  a  far  cry  from  that  doctrine  to  the  doc- 
trine that  the  "utilities"  and  "costs"  directly 
connected  with  the  production  and  consump- 
tion of  economic  goods,  in  the  minds  of  individual 
men,  are  an  adequate  explanation  of  anything. 

Were  we  interested  in  ethical  and  political 
values  for  their  own  sake,  it  would  be  easy  to 
show  that  our  conception  of  the  nature  of  so- 
ciety and  of  social  values  has  a  similar  signifi- 
cance for  politics  and  ethics.  There  is  no  one 
distinctive  emotion,  as  fear,  or  the  love  of  domina- 
tion, that  lies  at  the  basis  of  the  state;  there  is 
no  one  emotion,  as  sympathy,  or  the  love  of 
pleasure,  which  constitutes  the  essence  of  the 
moral  values,  nor  is  there  any  single  type  of 
mental  activity,  as  imitation,  or  consciousness 
of  kind,  which  furnishes  the  peculiar  theme  of 
sociology.  Social  life  is  not  in  water-tight  com- 
partments. It  is  one  whole,  of  which  the  differ- 
ent sciences  study  different  aspects.  And  the 
principle  of  division  of  labor  among  the  social 
sciences  is  not  that  one  science  shall  offer  one 
theory  of  society  and  another  science  another 
theory,  but  rather,  that  each  science  shall  take 
as  its  problem  a  phase  of  society,  and  explain  it 
by  reference  to  a  general  set  of  facts  which  all 
have  in  common.  The  differentiation  comes  not 
in  the  explanation  phenomena *  —  no  science  has 

1  Pareto,  in  the  introductory  chapter  of  his  Cours  d' Economic  Politique, 
defines  economics  in  terms  of  the  narrow  abstraction  which  he  has  chosen 
for  the  explanation  phenomenon,  as  the  "science  of  ophelimity"  (p.  6), 


ECONOMIC  SOCIAL  VALUE  155 

any  monopoly  on  any  set  of  forces  which  may 
be  used  for  the  purpose  of  explanation  —  but  in 
the  phenomena  to  be  explained,  in  the  problem 
phenomena.1 

and  ophelimity  is  "an  entirely  subjective  quality"  (p.  4).  There  are  two 
objections  to  this  procedure:  you  neither  completely  explain  your  problem 
phenomena,  nor  do  you  exhaust  the  possibilities  of  your  explanation 
phenomena  —  for  the  same  sort  of  mental  facts  have  bearing  on  ethical 
and  other  social  problems  as  well  as  on  economic  problems. 

1  I  am  indebted  to  Professor  E.  C.  Hayes,  of  the  Department  of  Soci- 
ology of  the  University  of  Illinois,  for  this  distinction. 


CHAPTER  XV 

S'OME  MECHANICAL  ANALOGIES 

IT  may  help  the  exposition  if  we  throw  the  ar- 
gument, briefly,  into  terms  of  the  more  familiar 
mechanical  analogies,  and  speak  of  the  equi- 
libria and  transformations  of  social  forces.  Of 
course,  mechanical  analogies  have  been  used 
from  time  to  time  already  in  our  discussion  — 
psychologists  themselves  often  find  it  useful 
to  conceive  of  their  phenomena  in  mechanical 
terms.  And  while,  in  the  exposition,  we  shall 
find  frequent  reason  to  prefer  our  plan  of  con- 
ceiving society  as  a  psychical  organism,  and  the 
social  forces  as  phases  in  an  organic  process,  still 
certain  relations  may  be  clearer  for  being  put 
into  the  other  form. 

Social  values  may  be  transformed  into  other 
forms  of  social  value  —  as  heat  may  be  trans- 
formed into  electricity,  or  into  motion,  or  mo- 
tion into  heat,  etc.  Professor  Clark,  with  his  dis- 
tinction between  "capital"  and  "capital  goods," 
has  shown  how  economic  value  may  undergo 
constant  transformation,  as  to  its  physical  em- 
bodiment, and  yet  remain  generically  the  same. 
But  the  possibilities  of  transformation  are  not 
confined  to  the  economic  sphere.  We  may  gen- 
eralize the  notion.  A  man  may  use  economic 
value  to  attain  political  power;  having  the  politi- 
cal power,  he  may  use  it  to  get  economic  value 


SOME  MECHANICAL  ANALOGIES  157 

back  again,  by  direct  barter  and  sale,  if  he  wishes 
to  take  bribes,  or  by  subtler,  but  still  all  too 
familiar  means.  Or,  the  political  power  may 
be  transformed  into  personal  prestige,  if  used  in 
ways  that  please  those  whose  good  will  means 
prestige.  And  personal  influence  —  "live  hu- 
man power"  (in  Professor  Cooley's  phrase),1 
may  be  transformed  into  values  of  numerous 
sorts,  into  political  power,  into  moral  values  — 
if  he  who  has  it  wishes  to  make  a  propaganda  — 
into  prestige  for  other  men,  into  economic  value 

—  for  cannot  an  inspiring  man  command  the 
purses  of  others  in  behalf  of  his  plans  and  pur- 
poses?    And  may  not  popular  confidence  in  a 
great  statesman  or  financier  in  times  of  panic 
cause  fears  to  be  allayed,  and  values  to  return 
to  goods  that  had  lost  their  value?   A  man  who 
has  goods  for  which  no  demand  exists,  and  which 
have,  hence,  little  value,  may,  employing  those 
who  possess  the  art  of  creating  demand  to  make 
public  opinion  for  him  by  advertising,  find  his 
investment,  transformed  into  public  belief  and 
interest,  return  to  him  a  golden  harvest.    A  re- 
ligious value  may  flow  into  the  economic  value 
of  religious  books.    A  moral  or  religious  value 
may  be  transformed  into  a  law.    A  legal  value 

—  as  a  franchise  right 2  —  has  often  a  definitely 
recognized  economic  value  as  well.    Economic 
value,  spent  in  an  educational  campaign,  may 

1  Social  Organization,  p.  264. 

*  Professor  J.  R.  Commons  has  made  some  interesting  comments  in 
a  note  ("  Political  Economy  and  Business  Economy,"  Quar.  Jour.  Econ., 
Nov.,  1907),  as  to  the  extent  to  which  intangible  objects  have  come  to  have 
economic  value.  The  legal  and  psychical  nature  of  such  values  is.  of 
course,  very  manifest. 


158  SOCIAL  VALUE 

result  in  the  establishment  of  a  new  moral  or 
legal  value.  And  so  on  indefinitely.  Enough  has 
been  said  to  show  that  there  is  some  sort  of  ana- 
logy between  social  and  physical  forces,  in  that 
both  can  be  transformed  into  other  forms  of 
force.  The  analogy  might  be  pushed  further.  It 
is  often  difficult  to  make  the  transformation  in 
both  cases  —  there's  lots  of  "friction"  if  a  man 
starts  out  publicly  and  brazenly  to  buy  a  polit- 
ical office,  and  a  great  deal  of  waste  in  the  pro- 
cess. But  enough  has  also  been  said  to  show 
the  weakness  of  such  an  analogy:  in  creating 
personal  prestige  through  the  wise  use  of  his 
political  power,  an  officer  may  actually  increase, 
instead  of  exhausting,  his  political  power.  Or, 
in  the  moment  of  attempting  certain  transform- 
ations, the  original  power  may  be  suddenly  wiped 
out  —  as  if  a  great  political  leader  should  under- 
take to  popularize  some  form  of  immorality. 
There  is  no  law  of  equivalence,  of  conservation  of 
energy,  in  social  forces.  Their  nature  and  their 
relations  are  organic,  and  not  mechanical. 

Or,  we  may  speak  of  equilibria  among  social 
forces.  Economists  have  for  a  long  time  been 
used  to  this,  speaking  of  equilibria  between 
supply  and  demand,  between  labor  and  capital, 
between  enterprise  and  the  other  factors  of  pro- 
duction, between  intensive  and  extensive  mar- 
gins, etc.  But  we  may  also  have  equilibria  be- 
tween, say,  demand  and  moral  values,  as  when 
moral  forces  oppose  the  consumption  of  liquor, 
or  between  supply  and  law,  as  in  the  case  where 
regulation,  rather  than  total  suppression,  of 


SOME  MECHANICAL  ANALOGIES  159 

certain  vicious  businesses  is  the  practice,  or 
where  the  effort  at  total  suppression  falls  short. 
And  equilibria  between  enterprise  and  law  and 
morals  are  being  constantly  worked  out  —  en- 
trepreneurs seeking  to  produce  at  the  minimum 
expense,  even  at  the  cost  of  the  lives  and  health 
of  their  employees,  and  law  and  morals  1  draw- 
ing limits  beyond  which  they  must  not  go,  with 
a  struggle  between  them  at  the  margin  —  and 
the  money  prices  of  the  products  reflect  the 
marginal  equilibrium  attained.  Supply  may  be 
in  equilibrium  with  a  protective  tariff,  or  an  in- 
ternal revenue  excise  —  legal  values  which  the 
economists  have  long  been  accustomed  to  treat 
quantitatively  by  the  laws  of  incidence,  and 
whose  strength  they  measure  in  terms  of  money 
prices.2  Not  "utility  and  cost,"  but  an  infinite 
complex  of  social  forces  are  in  equilibrium  in  the 
economic  situation. 

And  the  social  forces  in  equilibrium  at  focal 
points  are  themselves  composites  of  many  forces, 
cooperating  and  reinforcing  each  other,  each  of 

1  Moral  values,  like  economic  values,  in  the  sense  in  which  I  use  the 
term  here,  are  actual  facts,  and  not  mere  ideals.  A  moral  value  is  a  value, 
to  the  extent  that  it  is  an  effective  power  in  motivation,  to  the  extent 
that  the  social  will  backs  it  up,  and  punishes  with  its  disapproval  and  with 
the  subtle  penalties  which  social  disapproval  involves,  infractions  of  the 
moral  standard  in  question.    I  am  not  here  passing  judgment  on  moral 
values  themselves  in  the  light  of  any  ideal  standard,  but  simply  describing 
the  manner  in  which  moral  values  function. 

2  Intrinsically,  there  is  no  more  reason  why  the  economist  should  con- 
cern himself  with  measuring  quantitatively  the  effect  of  tariff  laws  than 
with  a  similar  treatment  of  other  legal  values.   Tariffs  do  not  affect  in- 
dustry any  more  intimately  than  hosts  of  other  laws.  The  obvious  rea- 
son why  the  economic  laws  of  taxation  have  been  worked  out  and  the 
others  ignored,  in  our  economic  analyses,  is  that  the  tax  laws,  being  them- 
selves expressed  in  money  terms,  are  more  easily  handled  by  the  econo- 
mist. 


160  SOCIAL  VALUE 

these  forces  having  its  own  equilibria  with  other 
minor  forces  —  a  net  resultant  sending  the  un- 
neutralized  energy  of  both  in  a  common  direc- 
tion, to  form  part  of  a  bigger  stream  of  energy. 
"Demand"  is  a  stream  of  energy  fed  by  many 
springs,  among  which,  no  doubt,  individual 
wants  for  the  good  in  question  are  to  be  found, 
but  which  include  the  legal  and  moral  values  of 
men,  also,  and  an  infinite  host  of  other  forces. 

And,  just  as  one  form  of  physical  energy  may 
be  substituted  for  another,  under  different  sys- 
tems of  technique,  electricity  taking  the  place  of 
steam  power,  steam  doing  the  work  formerly 
done  by  horse  or  human  power,  so,  in  particular 
forms  of  social  organization,  one  form  of  social 
force  may  do  the  work  that  is  better  done  by 
some  other  form  of  social  force  under  a  differ- 
ent form  of  social  organization.  Thus  the  reg- 
ulation of  the  details  of  conduct,  a  matter  of 
iron  law  (or  of  custom  with  the  force  of  law)  in 
certain  stages,  we  now  leave  to  the  control  of 
subtler  social  forces.  At  one  stage  we  depend  on 
religious  values,  the  curse  and  the  benediction 
of  the  church,  as  a  tremendously  vital  power  in 
social  control;  now  we  find  other  modes  of  so- 
cial energy  frequently  more  efficacious.  Now  we 
depend  primarily  on  economic  social  values, 
under  a  competitive  system,  to  motivate  the 
economic  activities  of  society,  to  determine 
whether  this  piece  of  land  shall  be  planted  in 
wheat,  or  in  some  other  crop,  or  fertilized  in  this 
or  that  manner;  in  the  mediaeval  English  manor, 
many  questions  like  these  were  settled  by  vote 
of  the  manor  court. 


SOME  MECHANICAL  ANALOGIES  161 

But  whatever  the  form  in  which  the  social 
energy  of  control  and  motivation  manifests 
itself,  its  functional  character  is  the  same.  It  has 
its  origin  in,  and  receives  its  vitality  from,  the 
social  will  —  or  better  is  a  phase  of  the  social 
will  —  as  steam  power,  electric  power,  and  the 
energy  in  human  muscles,  are  species  of  the  same 
generic  force. 

The  effort  has  not  been  made  to  put  the  whole 
of  our  argument  into  these  obviously  uncon- 
genial terms.  The  mechanical  analogies,  often 
useful  for  particular  purposes,  fail  to  bring  out 
the  rich  complexity,  the  organic  nature,  of  the 
social  processes,  and,  by  their  very  simplicity, 
often  lead  to  the  ignoring  of  essential  factors. 
For  the  purposes  of  the  practical  economist, 
however,  concerned  with  price  analysis  in  a  situ- 
ation which  is  so  complex  that  he  can  give  at- 
tention to  only  one  set  of  forces,  or  tendencies, 
at  a  time,  and  where  quantitative  measurement 
is  essential,  it  is  often  highly  necessary  to  ab- 
stract from  the  organic  complexity,  to  assume 
that  other  forces  than  those  he  is  measuring 
are  constant,  and  to  put  his  argument  into 
mechanical  terms.  My  conception  involves  no 
radical  revision  of  economic  methodology  in 
this  matter.  It  is  primarily  concerned  with  the 
interpretation  and  validation  of  this  methodology. 
To  this  topic  I  shall  return  in  the  chapters  on 
the  relation  between  the  theory  of  value  and 
the  theory  of  prices. 


CHAPTER  XVI 

PROFESSOR  SELIGMAN'S  PSYCHOLOGICAL  DOCTRINE  OF 
THE  RELATIVITY  OF  VALUES 

PROFESSOR  SELIGMAN'S  discussion  of  value  theory 
has  been  extremely  fertile  in  suggestions  for 
me,  and  I  find  the  spirit  of  the  positive  theory 
outlined  in  this  book  much  closer  to  the  general 
point  of  view  of  his  doctrines  than  to  those  of 
any  other  economic  writer.  His  recognition  of 
the  generic  character  of  value,  of  the  fact  that 
economic  value  is  but  a  species  within  a  genus,1 
his  contention  that,  while  ethical  principles  de- 
pend on  economic  considerations  in  primitive 
life,  they  still,  in  later  and  higher  stages,  attain 
a  relative  independence,  and  react  on  economic 
life,2  his  recognition  of  the  essentially  social 
nature  of  even  the  individual's  wants,3  his  dis- 
cussion of  the  legal  and  moral  "level  of  com- 
petition," 4  and,  in  general,  his  insistence  upon 
a  sociological  point  of  view,  especially  in  the 
treatment  of  all  practical  problems,  have  been 
of  marked  assistance  to  me  in  freeing  my  mind 
from  the  individualistic  bias  of  the  narrow  price 
analyses,  and  in  making  clear  the  gap  between 
existing  theories  of  value  and  the  function  of  the 
value  concept  in  economic  science.  At  certain 

1  Principles,  1905.  p.  174. 

1  Economic  Interpretation  of  History,  passim. 

»  Principles,  p.  175.  «  Ibid.,  pp.  147-48. 


SELIGMAN'S  PSYCHOLOGICAL  DOCTRINE     163 

stages,  as  already  indicated  in  part,  his  theories 
differ  pretty  radically  from  that  set  forth  in  the 
preceding  pages.  For  one  thing,  I  find  no  place 
in  my  scheme  for  the  notions  of  social  utility 
and  social  cost 1  which  are  prominent  in  his 
discussions,  as,  indeed,  in  the  discussion  of  most 
of  the  adherents  of  the  social  value  school. 
There  is  one  further  point  of  difference,  however, 
to  which  I  wish  especially  to  call  attention,  as 
criticism  of  Professor  Seligman's  view  brings 
to  light  certain  significant  points  in  the  theory 
I  am  defending.  The  following  quotation  is 
from  his  article,  "  Social  Elements  in  the  Theory 
of  Value,"  from  the  Quarterly  Journal  of  May, 
1901: 2  — 

Progress  consists  in  reducing  costs,  so  that  we  gradually 
approach  gratuity.  But,  in  reducing  the  value  of  certain 
things,  we  necessarily  increase  the  value  of  other  things. 
By  diminishing  the  efforts  required  to  satisfy  one  want, 
we  liberate  the  efforts  needed  to  satisfy  a  new  want;  it  is 
only  when  we  can  satisfy  this  new  want  that  the  means  of 

1  It  might  be  possible  to  put  the  argument  into  terms  which  would  give 
an  analogical  meaning  to  "social  utility"  and  "social  cost."  The  diagram 
representing  the  intersection  of  the  demand  curve  and  the  supply  curve, 
fixing  price,  may  be  taken  equally  well  to  represent  the  balance  of  social 
forces  which  lies  back  of  the  market  phenomena  in  the  case  of  a  given 
commodity.  The  demand  curve  might  then  be  called  a  "social  utility" 
curve,  and  the  supply  curve  a  "social  cost "  curve,  if  only  it  be  remembered 
that  cost  and  utility  here  have  only  a  vague,  analogical  meaning,  and  cover 
up  a  host  of  factors  which,  while  they  fall  conveniently  into  two  opposing 
groups, like  the  individual's  "cost"  and  "utility,"  are  yet  much  more  than 
the  latter.  But  they  are  really  so  very  much  more  than  the  latter,  that 
it  seems  to  me  misleading  to  continue  the  use  of  the  terms,  utility  and 
cost,  when  the  associations  of  these  terms  in  economic  theory  are  remem- 
bered. The  tendency  would  be  to  make  the  student  feel  that  value  depends 
on  two  abstract  phases  of  social-mental  life,  instead  of  being  an  outcome 
of  the  organic  whole. 

1  Pp.  342-43. 


164  SOCIAL  VALUE 

satisfaction  acquires  value.  For  the  pioneer  who  with 
difficulty  is  able  to  clothe  and  feed  himself  a  piano  has  no 
value.  It  is  only  as  clothing  and  food  take  up  less  of  his 
energy  —  that  is,  become  of  less  value  to  him  —  that  he 
will  appreciate  the  new  want,  until  finally  in  civilized  soci- 
ety a  piano  is  worth  far  more  than  a  suit  of  clothes.  Since 
value,  as  we  know,  is  simply  an  expression  for  marginal  util- 
ity, we  cannot  affirm  that  value  in  general  ever  increases  or 
decreases.  As  pianos  are  worth  more,  clothing  is  worth  less. 

The  relativity  of  value  is  here  made  to  depend 
on  a  ground  different  from  that  which  lies  at  the 
basis  of  the  English  School's  doctrine  of  relativity. 
The  ground  of  the  latter  is  logical;  the  ground  for 
Professor  Seligman's  view  is  psychological.  Val- 
ues considered  as  mutual  relations  between  two 
goods  cannot  both  fall  —  a  fall  in  one  means 
that  it  goes  lower  than  the  other,  whence  in- 
evitably the  other  must  rise,  as  a  matter  of  logi- 
cal definition.  For  Professor  Seligman,  on  the 
other  hand,  value  is  a  quantity  of  marginal 
utility.  So  far  as  the  logic  of  the  situation  is 
concerned,  an  increase  in  the  supply  of  good 
diminishes  their  marginal  utility,  and  so  their 
value.1  But,  as  soon  as  that  is  done,  a  new  want 
springs  into  existence,  a  new  object  receives 
value  therefrom,  and  the  total  quantity  of  value 
remains  as  before.  In  the  article  from  which 
the  quotation  is  taken,  the  doctrine  is  merged 
to  some  extent  with  the  English  doctrine  of 
logical  relativity,  as  indicated  by  the  discussion 

1  The  reader  will  understand  that  I  am  using  accustomed  phraseology 
and  making  customary  assumptions,  not  because  I  approve  of  them,  but 
because  the  point  at  issue  here  is  not  affected  by  the  question  as  to  the  re- 
lations between  value  and  utility,  etc.  The  distinction  between  a  utility 
curve  and  a  price  curve  does  not  affect  the  argument  here. 


SELIGMAN'S  PSYCHOLOGICAL  DOCTRINE     165 

on  page  343,  and  by  the  footnote  on  page  344. 
The  English  doctrine  is  also  suggested  by  the 
treatment  in  the  Principles  of  Economics  (pp. 
184-85),  where  it  is  stated  that  "prices  may  rise 
or  fall  with  reference  to  this  standard,  but  we 
cannot  speak  of  a  general  rise  or  fall  of  values, 
because  there  is  no  fixed  point."  It  is  clear, 
however,  that  the  argument  for  relativity  in  the 
passage  first  quoted,  is  wholly  distinct  from, 
and  independent  of,  the  logical  relativity  of  de- 
finition. Professor  Seligman,  in  conversation 
with  the  writer,  has  so  distinguished  it,  and 
has  indicated  that,  rejecting  the  logical  doctrine 
of  relativity,  he  now  holds  this  psychological 
doctrine  of  relativity,  as  distinct,  both  from  the 
absolute  conception  of  Professor  Clark,  and  the 
relative  conception  of  the  English  School. 
•  As  preliminary  to  a  criticism  of  Professor 
Seligman's  doctrine,  certain  distinctions  must 
be  made.  Values  may  be  relative  in  Professor 
Seligman's  sense  without  being  relative  in  the 
sense  in  which  the  English  School  uses  the  term : 
the  English  School  thought  only  of  the  relations 
among,  say,  a  unit  of  wheat  and  a  unit  of  corn, 
a  unit  of  woolen  goods,  a  unit  of  wine,  etc.: 
Professor  Seligman  is  thinking  of  the  total  stocks 
of  these  various  commodities.  Assume,  for 
simplicity,  that  the  stocks  of  all  commodities 
were  doubled,  and  that  the  demand  curves  for 
all  the  commodities  have  the  same  shape,  and 
that  form  is  the  rectangular  hyperbola,1  so  that 

1  Analytically  expressed  xy=c.  This  curve,  by  definition,  leaves  the 
"value  area"  (xy)  constant. 


166  SOCIAL  VALUE 

the  absolute  value  of  each  unit  of  each  com- 
modity would  be  exactly  cut  in  half.  The  Eng- 
lish School  would  say  that  there  had  been  no 
change  in  the  values  of  the  units;  Professor 
Seligman  would  say  that  there  had  been  no 
change  in  the  value  of  the  stocks,  but  would  con- 
cede at  once  that  every  unit  has  had  its  value 
cut  in  half.1 

Another  distinction  must  be  made.  There  is, 
to  be  sure,  at  any  given  time,  a  pretty  definitely 
limited 2  amount  of  social  productive  energy. 
This  energy  can  be  distributed  among  only  a 
limited  number  of  products.  Hence,  there  can 
be  only  a  limited  number  of  objects  to  receive 
value  from  the  mental  energies  of  society.  But 
does  it  follow  from  this  that  what  we  may  call 
the  social  energy  of  value-giving  is  a  limited 
thing?  Or,  granted  that  it  is  limited,  does  it  ne- 
cessarily follow  that  the  limits  are  fixed  and  rigid? 
Cannot  circumstances  arise  which  will  make  it 
vary  in  amount?  If  a  new  want  arises,  does  it 
necessarily  follow  that  all  the  old  wants  become 
less  intense  in  the  exact  degree  that  the  new  want 
is  intense?  Must  a  quantum  of  value  be  with- 
drawn from  the  old  objects  precisely  equal  to 
that  which  is  attached  to  the  new  object?  This 

1  A  complication  must  be  noticed  here,  due  to  my  use  of  the  term, 
"  demand  curve."  I  am  tacitly  assuming  that  the  absolute  value  of  the 
money  unit  remains  the  same  in  this  process,  and  so  must  say  that  the 
English  School  would  concede  that  the  value  of  the  money  unit  has  doubled 
even  though  holding  that  all  the  other  values  remain  unchanged,  except 
with  reference  to  the  money  unit.  For  Professor  Seligman,  the  value  of 
money  (i.e.,  the  total  stock)  has  not  changed. 

1  But  the  limitation  is  not  absolute.  New  incentives  may  call  out  sub- 
stantial increases  in  productive  activity. 


SELIGMAN'S  PSYCHOLOGICAL  DOCTRINE     167 

doctrine  is  deliberately  affirmed,  so  far,  at  least, 
as  the  individual  is  concerned,  in  the  article  on 
"Worth"1  in  Baldwin's  Dictionary  of  Philosophy, 
etc. : — 

The  struggle  for  existence  among  dispositions,  which  are 
at  once  the  objects  of  ethical  valuation  and  the  source  of 
value  reactions,  springs  out  of  the  nervous  conditions  of 
these  dispositions.  While  there  dwells  in  each  the  tendency 
to  utmost  activity  under  the  given  conditions,  yet,  since 
the  valuing  subject  is  master  of  only  a  limited  energy  of 
valuation,  i.e.,  nervous  energy,  the  increase  of  value  of  any 
given  disposition  must  necessarily  cause  others  to  decrease. 
In  any  case  increase  of  values  is  always  relative. 

Now  two  lines  of  criticism  suggest  themselves. 
In  the  first  place,  the  concluding  sentence  of 
the  quotation  is  a  non-sequitur.  If  there  be  a 
definite,  absolute  quantity  of  energy,  then  its 
distribution  among  objects  can  give  absolute 
quantities  of  value.  Reservoirs  connected  by 
pipes  may  among  them  contain  a  definite  quan- 
tity of  water,  and  increase  in  the  volume  of 
water  in  one  may  be  at  the  expense  of  all  the 
others.  But  still  the  amount  of  water  in  each  is 
an  absolute  amount.  This  criticism,  I  may  note, 
Professor  Seligman  concurs  in.  Conceding  that 
a  definite  amount  of  value  may  exist  in  each 
object,  he  holds  that  there  is,  none  the  less,  a 
relativity  about  value  in  the  sense  that  increase 
in  the  value  of  one  item  can  only  come  from  a 
decrease  in  the  value  of  another,  and  vice  versa. 
The  other  line  of  criticism  calls  attention  to  the 

1  Written  by  Professor  W.  M.  Urban,  author  of  Valuation,  to  which 
frequent  reference  has  been  made.  Vide  Valuation,  p.  4,  n.  The  article  was, 
of  course,  written  several  years  before  the  book. 


168  SOCIAL  VALUE 

identification  of  "energy  of  valuation"  with 
"nervous  energy."  That  the  two  are  identical 
would  be  maintained  only  by  the  crudest  ma- 
terialism. The  one  is  a  physical  force;  the  other 
is  a  psychical  force.  While  nervous  energy  and 
energy  of  valuation  may  be  connected,  the  na- 
ture of  the  connection  is  surely  not  so  well  known 
as  to  justify  the  assumption  that  definite  limita- 
tion in  the  one  implies  a  precisely  corresponding 
limitation  in  the  other.1  There  is  no  justifica- 
tion —  at  least  in  the  present  state  of  psycho- 
logical knowledge  —  for  holding  that  the  law  of 
the  "conservation  of  energy"  applies  to  psychi- 
cal energy.2 

Some  concrete  illustrations  will  make  clearer 
the  difficulties  of  the  doctrine,  as  applied  to 
economic  life.  Assume  a  group  of  men  on  board 
a  whaling  vessel,  who  suddenly  discover  that 
they  will  be  obliged  to  spend  the  winter  in  the 
ice-zone,  instead  of  reaching  home  in  the  fall  as 
they  had  planned.  Will  not  the  value  of  every- 
thing in  their  store  of  provisions  be  increased? 
Will  not  their  whole  stock  of  wealth  have  a  greater 
value?  But  this,  Professor  Seligman  objects,  is 
because  they  are  in  a  situation  such  that  oppor- 
tunity for  reproduction  is  lacking,  and  he  raises 
the  question  as  to  whether  the  same  situation 
is  possible  in  economic  life  on  a  large  scale,  where 
wealth  is  being  constantly  produced.  Well,  as- 
sume that  a  crop  failure  on  a  large  scale  occurs. 

1  In  this  view  I  am  sustained  by  Professor  John  Dewey. 
1  Cf.  Stuart,  "Valuation  as  a  Logical  Process,"  in  Dewey's  Studiet  in 
Logical  Theory,  pp.  828,  n.,  and  380. 


SELIGMAN'S  PSYCHOLOGICAL  DOCTRINE     169 

Will  not  the  value  of  the  total  existing  supply  of 
the  articles  hi  which  there  is  a  failure  be  raised? 
And  will  not  other  competing  articles  of  food 
have  their  values  increased  also?  But,  Professor 
Seligman  would  retort,  these  increases  would 
be  at  the  expense  of  the  values  of  the  half -grown 
fields  of  grain,  and  at  the  expense  of  articles  other 
than  food.  Granted:  but  what  evidence  is  there 
of  exact  equivalence?  And  further,  assume  that 
half  of  every  existing  stock  of  commodities,  of 
every  sort,  were  suddenly  wiped  out.  Would 
the  sum  total  of  values  remain  the  same?  Only 
on  the  assumption  that  the  social  value  curve 
for  this  totality  of  commodities  is  a  rectangular 
hyperbola.1  That  this  particular  shape  of  the 
curve  holds  for  any  particular  commodity  would 
be  difficult  to  prove.  That  it  does  not  hold  at 
all  for  the  necessities  of  life  is  one  of  the  common- 
places of  economic  analysis.  Initial  items  in  a 
stock  of  necessities  have  a  very  great  value, 
when  there  are  no  other  items  of  the  stock,  and 
the  curve  often  descends  very  abruptly.  Gregory 
King  has  undertaken  to  show,  in  terms  of  money, 
the  shape  of  this  curve  for  wheat  in  the  England 
of  his  day.  Other  commodities  have  curves 
which  behave  very  differently.  While  the  argu- 
ment from  the  part  to  the  whole  is  not  a  valid 
argument  in  the  presence  of  specific  reasons 
making  the  whole  obey  different  laws  from  the 
parts,  it  still,  in  the  absence  of  such  special 
considerations,  does  raise  a  strong  presumption. 
And  I  must  confess  that  I  see  no  reasons  why  the 

1  See  tupra,  p.  165,  n. 


170  SOCIAL  VALUE 

curve  for  the  totality  of  commodities  should 
take  the  particular  form  of  a  rectangular  hyper- 
bola, instead  of  some  other  form.  A  priori,  the 
presumption  would  seem  to  be  that  its  form 
would  be  irregular. 

There  is  another  point  of  view  which  seems  to 
support  Professor  Seligman's  contention,  and 
that  is  the  money-price  viewpoint.  At  a  given 
moment,  each  man  has  a  definite  quantity  of 
money  —  or  of  bank-credit  —  which  he  can  use 
in  purchasing  commodities.  If  he  spends  it  for 
some  commodities,  he  cannot  spend  it  for  others. 
As  he  joins  one  group,  demanding  one  com- 
modity, he  must  —  at  least  to  the  extent  of  that 
amount  of  money  —  withdraw  from  other  groups 
demanding  other  commodities.  At  a  given  in- 
stant, therefore,  there  is  a  definite  demand- 
situation  with  reference  to  every  item  of  every 
stock,  and  one  can  increase  its  money-price  only 
by  drawing  upon  the  demand  for  others.  But 
let  a  panic  now  come.  Let  these  bank  credits 
become  unstable:  let  social  confidence  be  wiped 
out,  and  what  happens  to  general  prices  and 
values?  Does  the  value  that  leaves  the  general 
range  of  commodities  all  betake  itself  to  the 
gold  supply?  That  cannot  be,  for  the  supply  of 
gold,  as  compared  with  the  supply  of  other 
commodities,  is  well-nigh  infinitesimal,  and  if 
the  whole  of  the  values  that  left  the  commodi- 
ties went  into  gold,  then  every  unit  of  gold  would 
be  tremendously  increased  in  value,  and  prices 
in  terms  of  gold  would  fall,  not  two-thirds,  but  a 
thousandfold.  What  has  become  of  the  values? 


SELIGMAN'S  PSYCHOLOGICAL  DOCTRINE     171 

They  have  simply  been  wiped  out.  A  psychical 
change  has  taken  place,  a  malady  has  afflicted 
the  social  mind,  its  integrity  is  shattered,  doubt 
has  taken  the  place  of  confidence,  panic  fear  has 
replaced  buoyant  expectation,  demoralization 
and  disorganization  have  lessened  the  social 
psychic  energy  —  or  dissipated  it  in  inchoate, 
unorganized  individual  activities.  The  sum  total 
of  values  is  lessened.  Of  course,  the  reverse  may 
happen.  Let  confidence  be  restored,  let  the  social 
psychic  organization  function  normally  once 
more  and  values  rise  again.  As  we  have  indicated 
in  our  discussion  of  the  psychology  of  value,  be- 
lief, as  well  as  desire  and  feeling,  may  often  be 
a  very  significant  phase  in  the  value  situation, 
and  have  a  motivating  power  quite  as  great  as 
the  other  phases.  Credit,  while  it  exists,  is  a  real 
addition  to  the  sum  of  values  —  has,  that  is  to 
say,  a  real  power  in  motivating  economic  activ- 
ity, calling  forth  new  productive  efforts,  and 
directing  labor,  capital,  and  enterprise  to  new 
channels.  This  is  not,  of  course,  asserting  the 
doctrine  of  John  Law.  Credit  cannot  be  manu- 
factured out  of  whole  cloth.  Beliefs,  at  least  to 
some  extent,  follow  rational  laws,  and,  except 
in  moments  of  hysteria,  there  must  be  something 
for  people  to  believe  in  before  strong  belief  can 
emerge.  Sometimes,  of  course,  an  unstable  but 
momentarily  powerful  belief,  based  on  nothing 
rational,  may  dominate  a  situation,  and  radi- 
cally upset  the  existing  scale  of  values  —  with  a 
sad  reaction  following  shortly  after.  And,  in 
the  absence  of  belief,  the  most  rational  justifica- 


172  SOCIAL  VALUE 

tion  for  belief  is  impotent.  Witness  the  bank- 
ruptcies, in  times  of  panic,  of  men  whose  assets 
turn  out  later  perfectly  adequate,  but  who  are 
unable  to  liquidate  them  at  the  time  of  the  panic. 
Note,  too,  in  this  connection,  the  tendency  in 
times  of  panic  to  turn  to  government  for  aid  in 
sustaining  values  —  to  substitute  for  the  waning 
social  force  of  belief  the  power  of  a  new  legal 
force. 

A  case  parallel  to  the  panic,  as  inducing  a 
diminution  of  the  total  psychic  energy  of  con- 
trol, is  presented  by  widespread  epidemics. 
Gabriel  Tarde,  criticizing  Mill's  contention  that 
all  values  cannot  rise  or  fall,  instances  the  gen- 
eral fall  in  all  values  which  an  epidemic  occa- 
sions, and  the  recovery  of  values  after  the  epi- 
demic.1 This  criticism  of  Tarde's  will  not,  of 
course,  hold  as  against  Mill's  doctrine  (inde- 
fensible on  other  grounds)  which  bases  the  re- 
lativity of  values  upon  a  logical  definition,  but 
it  will  hold  as  against  the  psychological  doctrine 
of  relativity  under  discussion. 

A  further  point  is  to  be  noted.  Even  granting 
that  the  sum  total  of  social  power  of  motiva- 
tion is  definitely  limited,  it  still  does  not  follow 
that  the  sum  total  of  economic  value  is  so  limited. 
For  not  all  of  this  social  psychic  energy  goes  into 
economic  values.  Religious,  aesthetic,  patriotic, 
moral  values,  all  call  for  their  share  of  this  energy, 
and  the  amount  given  to  each  varies  from  time 
to  time.  This  phase  of  the  matter  is  discussed 

1  "La  psychologic  en  £conomie  politique,"  Rec.  Philosophique,  vol. 
xn,  p.  238. 


SELIGMAN'S  PSYCHOLOGICAL  DOCTRINE     173 

in  detail  by  Professor  Ross,  in  the  chapter  on 
"The  Social  Forces"  in  his  Foundations  of  So- 
ciology, and  I  shall  not  expand  the  discussion 
here. 

The  doctrine  that  there  is  a  definite,  unchang- 
ing sum  of  economic  values,  therefore,  cannot, 
in  my  judgment,  be  maintained.  And  yet,  it 
must  be  conceded,  there  is  a  substantial  element 
of  truth  in  Professor  Seligman's  contention.  At 
a  given  time,  or  through  a  considerable  period, 
assuming  social  conditions  to  change  slowly, 
there  are  fairly  definite  amounts  of  social  energy, 
both  of  production  and  of  control  over  produc- 
tion (value-giving  energy).  The  surface  fact 
here  is  that  men  have  definite  incomes.  If  this 
energy  is  disposed  of  in  one  way,  it  cannot  be 
disposed  of  in  another.  If  men  elect  to  have  one 
good,  they  must  dispense  with  something  else. 
And  in  using  their  control  over  social  forces  to 
increase  the  value  of  one  good,  they  must  re- 
frain from  using  it  to  increase  the  value  of  an- 
other. In  the  long  run,  these  quantities  are  sub- 
ject to  change.  At  a  given  moment,  a  sudden 
disturbance  may  radically  change  them.  But, 
as  a  statement  of  tendency,  Professor  Seligman's 
doctrine  must  be  admitted. 

Professor  Seligman's  view  differs  from  that  of 
Professor  Clark  simply  in  that  it  adds  an  ele- 
ment. On  its  logical  side,  it  conceives  value  in 
the  same  way.  Value  is  a  quality,  with  degrees, 
i.e.,  a  quantity.  This  quantity  in  a  particular 
good  is  an  absolute  fraction  of  an  absolute  quan- 
tity. It  is  not  changed  merely  in  consequence 


174  SOCIAL  VALUE 

of  being  compared  with  some  other  good  —  it 
remains  the  same,  regardless  of  what  price- 
ratio  it  is  put  into.  On  its  formal  and  logical  side, 
therefore,  Professor  Seligman's  concept  is  to  be 
classed  with  that  of  Professor  Clark  —  with 
which,  as  indicated  in  chapter  n,  I  am  in  hearty 
accord,  in  so  far  as  the  issues  raised  in  that 
chapter  are  concerned. 


CHAPTER  XVII 

THE  THEORY  OP  VALUE  AND  THE  THEORY  OF  PRICES 

IN  most  English  treatises  on  economics,  a  price 
means  a  sum  of  money  given  in  exchange  for  a 
commodity,  or  the  ratio  between  the  money  and 
the  commodity,  or  the  ratio  between  the  value  of 
the  money  and  the  value  of  the  commodity.  In 
any  case,  price  as  a  rule  involves  the  idea  of 
money.  With  the  Germans,  on  the  other  hand, 
Prels  means  any  exchange  ratio  (or  a  quantity  of 
commodities  of  any  sort  given  in  exchange  for  a 
good),  whether  or  not  one  of  the  terms  of  the  ratio 
involves  money,  and  the  distinction  between 
price  and  value  (Preis  and  Wert)  is,  commonly, 
the  distinction  between  the  measure  and  the 
thing  measured,  or  between  "relative  value" 
and  "absolute  value"  in  Ricardian  phrase.1 
The  conception  of  price  has  been  broadened 
by  some  later  writers  in  English,  however,  to 
correspond  with  the  German  usage,  notably  by 
Professor  Patten,2  and  by  Professor  Schumpeter,3 
in  an  English  article  contributed  recently  to  the 
Quarterly  Journal.  I  do  not  care  to  argue  a  merely 
terminological  question,  and  I  readily  concede 
that  there  are  disadvantages  in  departing  from 

1  Cf.  Davenport,  op.  cit.,  pp.  296-97. 
*  Theory  of  Prosperity,  New  York,  1902,  pp.  16-17,  89. 
1  "On  the  Concept  of  Social  Value,"  Quar.  Jour.  Econ.,  Feb.,  1909, 
pp  226-27. 


176  SOCIAL  VALUE 

familiar  usage.  But,  on  the  other  hand,  since  I 
am  convinced  that  ratios  of  exchange  in  gen- 
eral, and  money  prices  in  particular,  are  generi- 
cally  the  same,  while  ratios  of  exchange  and 
values  are  generically  as  unlike  as  it  is  easily 
possible  for  two  things  to  be,  I  shall  use  the 
term  price  in  this  wider  meaning,  and  confine  the 
word  value,  in  the  exposition  of  my  own  theory, 
to  the  non-relative  meaning. 

The  distinction  between  prices  in  this  sense 
and  absolute  values  appears  in  Adam  Smith 
and  in  Ricardo.  These  writers  do  not  adhere 
very  strictly  to  either  meaning  of  the  term,  value, 
however.1  The  conception  of  absolute  values  is 

1  See  Wealth  of  Nations,  introductory  part  of  chap,  vm  of  bk.  i  (pp. 
66-67  of  the  Cannan  ed.)  For  Ricardo,  see  Works,  McCuIloch  ed., 
London,  1852,  p.  15.  Adam  Smith  seems  occasionally  to  use  value  in  the 
relative  sense,  as  on  p.  183  of  vol.  n  of  the  Cannan  ed.  Ricardo,  though  in- 
dicating that  he  is  concerned  only  with  relative  values  on  the  page  cited 
gupra,  still  speaks  of  values  as  simultaneously  falling,  in  ch.  xx,  on 
"Value  and  Riches,"  which,  of  course,  is  impossible  on  the  basis  of  the 
relative  concept.  There  is  no  point  to  torturing  these  passages  unduly, 
however,  in  the  effort  to  find  our  distinctions  in  them. 

Professor  Seligman  calls  my  attention  to  a  most  interesting  forty-page 
discussion  of  the  theory  of  value  by  W.  F.  Lloyd,  A  Lecture  on  the  Notion 
of  Value,  as  Distinguishable  not  only  from  Utility,  but  also  from  Value  in 
Exchange.  The  lecture  was  delivered  before  the  University  of  Oxford, 
in  Michaelmas  Term,  1833,  and  published,  in  accordance  with  the  rules 
of  the  foundation  which  provided  funds  for  the  lecture,  in  London,  1834. 
The  writer  insists  on  the  conception  of  value  as  absolute,  and  devotes 
pp.  30^iO  to  a  defense  of  the  absolute  conception.  He  cites  the  passage 
in  Adam  Smith  referred  to  supra,  in  which  Smith  distinguishes  real 
dearness  from  apparent  dearness  (introductory  part  of  chap,  vm  of  bk.  i). 
The  most  striking  thing  about  this  lecture,  however,  is  its  anticipation  of 
Jevons's  doctrine  of  marginal  utility,  and  its  emphasis  upon  the  subject- 
ive character  of  value.  The  word,  margin,  is  used  in  virtually  the  sense 
in  which  Jevons  uses  it,  on  p.  16. 

The  book  is  very  rare, — only  three  copies,  one  in  Professor  Seligman's 
library,  one  in  the  British  Museum,  and  one  in  the  Goldsmiths'  (for- 
merly Foxwell)  Library  in  London,  are  known  to  exist.  It  seems  to 
have  made  no  impression  upon  the  economists  of  the  time  of  its  publics- 


THEORY  OF  VALUE  AND  OF  PRICES        177 

lost  by  J.  S.  Mill,  and  the  distinction  which  he 
draws  in  connection  with  the  problem  of  the 
standard  of  deferred  payments  (not  so  called  by 
Mill)  is  between  values  (relative)  and  cost  of 
production.1  In  Cairnes,  the  two  conceptions 
are  hopelessly  confused  on  a  single  page,2  while 
Marshall's  whole  treatment  runs  in  terms  of 
price. 

In  what  follows,  I  wish  to  generalize  the  con- 
ception of  price,  to  show  the  function  of  the 
price  concept  in  economics,  to  distinguish  care- 
fully between  the  theory  of  value  and  the  theory 
of  prices,  and  to  see  what  light  the  theory  of 
value  outlined  in  this  book  throws  upon  the 
problems  of  the  price  analysis. 

In  chapter  n,  the  distinction  between  "abso- 
lute and  relative  values,"  or,  in  our  present 
phrase,  between  values  and  prices,  was  suffi- 
ciently indicated  not  to  need  further  elaboration 
here.  The  relation  between  them  was  made  clear 
—  the  absolute  value  must  first  exist  before  the 
price,  which  is  the  expression  of  the  value  of  a 
good  in  terms  of  some  other  valuable  object 
which  is  chosen  as  a  measure,  can  be  determined. 
In  fact,  two  values,  the  value  of  the  good  meas- 
ured, and  the  value  of  the  good  which  is  to 
serve  as  the  measure,  must  first  exist,  as  abso- 
lute quantities,  before  a  price-ratio  can  be  made 

tion.  A  reprint  to-day  would  enable  the  economic  world  to  do  belated 
justice  to  a  very  acute  and  original  thinker.  Cf.  Professor  Seligman's 
article  "On  Some  Neglected  British  Economists"  in  the  Economic 
Journal,  vol.  xm,  esp.  pp.  357-63. 

1  Principles,  bk.  m,  chap,  xv,  par.  2. 

*  Leading  Principles,  editions  of  1878  and  1900,  pp.  12-13. 


178  SOCIAL  VALUE 

between  them,  and  their  "relative  values" 
shown.  In  the  chapter  on  the  psychology  of 
value,  the  notion  of  price  was  generalized,  and 
we  spoke  of  the  price  measure  of  values  of  non- 
economic  sort.  This  notion  is  one  of  very  gen- 
eral application  and  one  of  significance  for  the 
whole  realm  of  social  and  psychical  phenomena: 
not  merely  where  the  question  of  exchanging 
economic  goods  is  involved,  but  wherever  choice 
among  alternative  goods,  or  courses  of  action, 
or  men,  or  institutions,  or  works  of  art,  or  other 
objects  of  value,  is  necessary,  we  compare  them 
with  each  other,  we  measure  them  by  each  other, 
we  price  them  in  terms  of  each  other.  We  ar- 
range them  in  scales  of  value,  or  in  series,  seeing 
which  is  higher  and  which  lower.  Where  only 
two  goods  are  involved,  we  may  call  either  the 
measure,  depending  on  the  point  of  view.  But 
where  many  goods  are  to  be  compared,  it  is 
highly  convenient  to  pick  out  some  one  as  the 
common  measure  of  all,  so  that  they  may  be 
reduced  to  common  terms.  For  measuring  eco- 
nomic goods,  money  is,  of  course,  the  standard, 
or  common  measure  par  excellence,  for  most 
purposes.  If  we  are  measuring  the  value  of  the 
political  institutions  of  various  countries,  we 
usually  take  the  institutions  of  our  own  country, 
with  which  we  are  most  familiar,  as  the  common 
measure  or  standard.  Or,  in  measuring  the  moral 
systems,  or  the  literary  masterpieces,  of  other 
countries,  we  again  find  those  of  our  own  people 
the  most  convenient  standard.  But  it  is  signi- 
ficant of  the  correctness  of  our  general  point  of 


THEORY  OF  VALUE  AND  OF  PRICES         179 

view  that  values  of  different  species  may  be 
measured  in  terms  of  each  other.  Money,  in 
particular,  is  a  very  general  measure,  which  may 
serve  for  many  values  outside  the  economic 
sphere.  Thus,  I  have  pointed  out  how  legal  values 
may  be  measured  in  terms  of  money,  as  when  the 
fine  for  one  offense  is  five  dollars,  and  that  for 
another  twenty-five.  Gabriel  Tarde 1  points 
out  that  by  comparing  the  theatre  receipts  of 
theatres  representing  different  dramatic  schools 
we  may  compare  the  vogues  of  each,  or  that  by 
comparing  the  income  of  the  clergy  in  different 
periods  we  may  get  some  index  of  the  variations 
of  religious  sentiments.  He  suggests  that  while 
money  as  a  measure  of  economic  values  usually 
functions  in  exchange,  it  may,  as  a  measure  of 
beliefs  or  other  social  forces,  function  through 
gifts,  through  popular  subscriptions  to  build 
this  or  that  statue,  for  the  support  of  scientific 
work  or  philanthropies,  or  even  through  thefts: 
"Quelquefois  meme  c'est  par  des  vols  ou  se 
montre  la  perversion  d'un  esprit  sectaire,  1'aber- 
ration  et  la  profondeur  de  ses  convictions  pas- 
sionees." 

Commonly,  indeed,  money  performs  even 
this  function,  that  of  measuring  currents  of  be- 
lief, passion,  enthusiasms,  etc.,  through  the  pro- 
cess of  exchange,  and,  ordinarily,  it  is  difficult  to 
get  any  single  current  separately.  We  simply  get 
the  resultant  of  an  equilibrium  of  a  complex  of 
forces  in  economic  values.  But  sometimes  a  sin- 
gle factor  stands  out  so  prominently  that  we  can 

s 

1  Psychologic  Economique,  vol.  I,  pp.  77-78. 


180  SOCIAL  VALUE 

abstract  from  the  rest,  and  let  money  changes 
measure  changes  in  it  alone.  For  example,  dur- 
ing the  three  days  of  the  battle  of  Gettysburg, 
the  premium  on  gold,  as  measured  in  terms  of 
Federal  paper,  fell  from  forty-five  per  cent  to 
twenty-three  and  a  fourth  per  cent.1  For  the 
market,  this  means  simply  a  change  in  the  eco- 
nomic value  of  Federal  paper.  But  for  one  who 
cares  to  look  even  superficially  behind  the  scenes, 
it  means  an  increased  volume  of  belief  in  the  tri- 
umph of  the  Federal  arms  —  a  belief  that  at  once 
affected  economic  values,  and  was  measured  in 
terms  of  money.  Or,  the  economist  may  abstract 
a  single  legal  factor,  as  a  tax  law,  and  measure 
its  influence  on  the  assumption  that  the  rest  of 
the  situation  is  constant,  in  the  well-known  laws 
of  shifting  and  incidence. 

Such  clean-cut  instances  are  not  the  rule, 
however.  The  organic  complexity  of  the  social 
forces  lying  back  of  economic  values  makes 
it  difficult  to  disentangle  single  elements,  and 
measure  their  force.  For  one  thing,  variations 
in  one  factor  usually  mean  movements  in  the 
others.  If  we  may  borrow  terms  from  chemistry, 
while  the  economist  may  give  us  a  qualitative 
analysis  of  these  forces,  it  is  hard  for  him  to 
give  us  a  quantitative  analysis.  And  the  charac- 
teristic of  pure  economic  theory  has  been  its 
effort  to  get  quantitative,  quasi-mathematical 
laws.  The  "pure  theorist,"  therefore,  does  well 
to  start  with  a  quantitative  value  concept  (a 
convenient  shorthand  or  symbol  for  the  infinite 

1  Scott,  Money  and  Banking,  1903  ed.,  p.  60. 


THEORY  OF  VALUE  AND  OF  PRICES         181 

complexity  that  lies  behind  it),  a  value  quan- 
tity in  which  the  net  outcome  of  social  inter- 
actions does  precisely  manifest  itself,  and  study 
the  laws  which  it  manifests.  His  chief  interest 
is,  not  in  the  origin  of  economic  value  itself, 
but  in  the  changes  in  quantities  in  value  in  dif- 
ferent goods  and  services  as  these  manifest  them- 
selves in  the  market,  and  submit  themselves 
to  economic  measurement.  In  a  word,  his  chief 
interest  is,  not  in  value,  but  in  prices.1  And  the 
great  bulk  of  pure  economic  theory,  and  prac- 
tically all  that  is  of  greatest  importance  in  pure 
theory,  is  in  the  theory  of  prices,  and  not  in  the 
theory  of  value.  Lest  I  be  misunderstood,  the 
qualification  must  be  repeated:  prices  here  mean, 
not  money-prices,  but  prices  in  the  generic  sense. 
In  this  sense  of  the  word  price,  it  is  just  as  ac- 
curate to  speak  of  the  price  of  money  in  terms  of 
commodities,  or  of  a  composite  of  commodities, 
as  to  speak  of  prices  of  commodities  in  terms  of 
money. 

That  is  to  say,  the  economist  gives  himself 
little  concern,  in  his  quasi-mathematical  study, 
as  to  the  ultimate  nature  of  the  social  forces 
that  manifest  themselves  in  the  market.  A  host 
of  forces  lie  back  of  demand,  but  the  economist 
puts  the  phenomena  of  demand  into  a  curve 
which  is  the  function  of  two  variables,  one  a 
quantity  of  money,  and  the  other  a  quantity  of 
goods.  Lying  back  of  these  quantities  of  goods 
and  money,  and  giving  meaning  to  the  curve,  are 
the  more  fundamental  quantities,  the  value  of 

1  Cf.  Schumpeter,  Quar.  Jour.  Econ.,  Feb.,  1909,  pp.  226-27. 


182  SOCIAL  VALUE 

the  goods  and  the  value  of  the  money.  Further 
than  this,  for  the  purposes  of  his  quasi-mathe- 
matical, pure  theory,  the  pure  economist  has 
no  real  occasion  to  go  —  in  proof  of  which  it 
need  be  remarked  simply  that  the  most  diver- 
gent theories  as  to  the  nature  of  value,  none  of 
them  adequate  if  the  theory  set  forth  in  this  book 
be  true,  have  not  prevented  the  development  of 
a  vast,  highly  organized,  and  immensely  use- 
ful body  of  price  doctrine,  shared  by  economists 
of  many  schools.  If  only  the  economist  have  a 
quantitative  value  concept,  he  can  do  wonders. 
And,  if  the  question  be  regarding  relations  be- 
tween factors  where  the  question  of  the  value 
of  money  may  be  ignored,  he  may  often  safely 
abstract  from  the  idea  of  value,  and  speak  simply 
of  money  quantities,  and  relative  changes  in 
these  money  quantities.  Such  is,  indeed,  Pro- 
fessor Marshall's  procedure  in  a  large  part  of 
his  great  work.  Professor  Davenport's  con- 
tention that,  from  the  standpoint  of  the  entre- 
preneur, the  whole  thing  may  be  looked  at  in 
pecuniary  terms,  is  true  of  many  problems.  Cost 
for  the  entrepreneur  is  simply  a  money  matter. 
And  while,  for  the  more  fundamental  analysis, 
we  of  course  must  insist  that  a  host  of  psychic 
forces  determine  what  those  money  costs  shall 
be,  our  analysis  will  justify  the  contention  that 
it  is  impossible  to  treat  them  in  any  but  price 
terms,  in  a  precise  and  quantitative  manner. 
They  are  too  complex.  Certainly  labor-pain  and 
abstinence,  looked  on  as  abstract  individual 
feeling-magnitudes,  will  not  explain  the  supply- 


THEORY  OF  VALUE  AND  OF  PRICES         183 

prices  of  labor  and  capital,  any  more  than  in- 
dividual "utilities"  will  explain  demand-sched- 
ules. And  we  may  add  that  the  terms  "social 
cost"  and  "social  utility"  can,  in  our  scheme, 
get  no  meaning  that  will  make  them  useful.  The 
social  value  concept  seems  to  us  absolutely  es- 
sential for  the  validation  of  the  whole  procedure 
of  the  price  analysis,  and  to  be  implied  in  every 
step  in  it,  but  the  only  meaning  we  can  find  for 
the  concept  of  social  marginal  utility  would  be 
one  which  would  make  it  identical  with  social 
value;  and  against  that  there  are  two  objections: 
first,  it  would  be  superfluous,  and  second,  it  would 
be  misleading.  "Social  utility"  can  get  only  a 
vague,  analogical  meaning  in  our  scheme.  In- 
stead of  explaining  social  value,  it  would  itself 
present  a  problem.1  A  measure  of  social  economic 
value  in  terms  of  a  feeling-magnitude  which  an 
individual  can  appreciate  is  not  to  be  had.  Value 
can  be  measured  and  quantitatively  handled  only 
in  terms  of  price. 

In  saying  this,  I  do  not  mean  to  impeach  that 
more  abstract  procedure  which  speaks  of  ab- 
stract units  of  value,  and  uses  arithmetical 
numbers  which  designate  no  particular  com- 
modities, or  algebraic  symbols,  or  even  ordinary 
speech,  to  indicate  quantitative  relations  among 
different  sums  of  these  abstract  units.  Such  pro- 
cedure is  thoroughly  correct,  and  often  highly 
convenient,  if  one  be  dealing  with  highly  gen- 
eral laws,  or  if  one  wish  to  avoid  any  complica- 
tions from  changes  in  the  value  of  any  concrete 

1  See  supra,  p.  163,  a.  ,. 


184  SOCIAL  VALUE 

commodity  which  might  be  chosen  as  the  stand- 
ard of  value.  Only,  I  would  insist,  such  procedure 
is  simply  an  abstraction  from  the  price  concept, 
and  so  presupposes  it.  A  unit  of  value,  in  the  con- 
crete, must  be  the  value  of  some  particular  con- 
crete good,  which  is  chosen  as  the  standard.  What 
good  is  chosen  is  a  purely  arbitrary  matter,  deter- 
mined by  convenience.  Abstract  value,  apart  from 
valuable  things,  is  an  utter  impossibility  —  only  a 
Platonic  idealism  or  mediaeval  realism  could  hold 
the  contrary  view.  And,  in  order  to  show  how 
many  units  of  value  there  are  in  a  good,  we  must 
compare  it  with  another  good,  whose  value  is 
the  unit,  unless,  indeed,  we  arbitrarily  choose 
as  our  unit  the  good  in  question,  and  say  that 
its  value  is  one  unit,  or  several  units,  in  case 
we  arbitrarily  define  the  unit  as  a  fraction  of  its 
value.  But  clearly  this  latter  procedure  would 
tell  us  nothing  after  all  as  to  the  amount  of  the 
value  in  the  good.  It  would  be  a  purely  formal 
process  —  like  renaming  a  "  hocus-pocus  "  and 
calling  it  two  "Abracadabras."  Any  real  meas- 
uring —  and  real  measuring  is  essential  for  any 
quantitative  manipulation  —  implies  two  things, 
one  of  which  shall  serve  as  the  measure  of  the 
other.  The  conception  of  abstract  units  of  value, 
therefore,  is  an  abstraction  from  the  price  con- 
ception, and  presupposes  it.1 

1  Cf.  p.  50,  n.  It  is  sufficiently  clear,  I  trust,  that  this  argument  is 
concerned  with  the  relativity  of  knowledge,  and  not  with  the  relativity  of 
value.  We  can  know  things  only  in  terms  of  our  "apperceptive  mass,"  but 
that  does  not  mean  that  things  exist  only  by  virtue  of  our  apperceptive 
mass.  And  even  knowledge  is  relative  only  when  it  is  " Knowledge-about." 
Cf.  James,  Principles  of  Psychology,  vol.  I,  p.  221,  and  The  Meaning 
of  Truth,  p.  4,  n. 


THEORY  OF  VALUE  AND  OF  PRICES         185 

A  valid  price  procedure,  in  my  view,  is  essen- 
tially this:  we  take  our  quantitative  value  con- 
cept, summing  up  the  multitudinous  social  forces 
which  determine  values :  then  we  assume  a  given 
set  of  ethical,  legal,  and  social  values  of  a  non- 
economic  sort,1  as  a  sort  of  frozen  framework 
within  which  our  economic  values  are  to  operate, 
and  which  shall  remain  constant  during  the  in- 
vestigation :  then,  measuring  the  economic  values 
in  terms  of  a  common  unit,  we  let  them  exert 
their  influence  on  the  situation,  and  see  what 
results  follow.  We  vary  first  one  and  then  the 
other,  and  see  what  readjustments  any  change 
involves.  Since  the  situation  is  so  infinitely 
complex,  we  bring  about  this  artificial  simplicity 
in  thought,  that  we  may  study  the  tendencies 
one  by  one.  But  a  given  economic  change  will 
work  out  its  consequences  fully  only  on  the  as- 
sumption that  other  economic  changes  are  not 
occurring.  We  can  in  thought  let  them  vary  one 
by  one,  but  they  do  in  fact  all  vary  at  once. 
And  further  —  and  for  this  fact  price  theory  has 
made  no  allowance  —  the  "frozen  framework" 
of  legal,  moral,  and  other  non-economic  social 
values,  is  not  "frozen."  Changes  in  economic 
values  lead  to  readjustments,  not  only  in  the 
other  economic  values,  but  also  in  the  legal, 
ethical,  and  other  values  of  the  framework. 
These  last  are  fluid,  psychic  forces,  just  as  truly 

1  Marshall  accords  a  limited  recognition  to  our  doctrine.  See  Principles, 
1907  ed.,  p.  35,  where  he  indicates  that  certain  parts  of  the  theory  of 
value  assume  the  prevailing  ethical  standards  of  our  Western  civilization, 
and  that  prices  of  various  stock  exchange  securities  are  "normally"  af- 
fected by  the  patriotic  feelings  of  purchasers,  and  even  brokers,  etc. 


186  SOCIAL  VALUE 

as  are  the  economic  values.  They  change  be- 
cause of  changes  in  the  economic  values;  they 
initiate  changes  in  the  economic  values;  and 
they  initiate  changes  which  deflect  the  tenden- 
cies of  changes  in  the  economic  values.  So  that, 
even  though  we  premise  a  thoroughly  organic 
theory  of  social  value,  in  which  the  influence  of 
the  non-economic  social  values,  working  through 
the  economic  values,  is  carefully  provided  for, 
we  still  have  to  correct  the  results  of  our  price 
analysis,  before  applying  it  to  practice,  to  ac- 
count for  changes  in  the  non-economic  values 
working  to  deflect  the  tendencies  which  the  eco- 
nomic values  would  lead  to  if  the  other  values 
had  remained  constant. 

This  last,  of  course,  most  economists  in  prac- 
tice constantly  try  to  do.  Present  day  discus- 
sions of  practical  economic  problems  are  rich 
in  data  of  a  non-economic  sort.  In  practice  the 
economist  recognizes  that  his  mission  is,  not  to 
see  how  far  a  few  abstract  factors  will  go  in  the 
explanation  of  economic  life,  but  rather,  to  ex- 
plain that  economic  life  by  any  means  in  his 
power,  though  he  ransack  heaven  and  earth 
in  the  process. 

Of  course,  it  is  but  a  commonplace  to  add  that 
the  economist,  in  practice,  does  try  to  take  ac- 
count of  the  extent  to  which  his  assumptions  as 
to  the  legal  and  social  "framework"  hold:  how 
far  there  is  real  freedom  of  competition,  how  far 
real  "intelligent  self-interest,"  how  far  mobility 
of  labor  and  of  capital,  how  far  monopoly  privi- 
lege, etc.  Or,  at  least,  he  usually  tries  to  make 


THEORY  OF  VALUE  AND  OF  PRICES         187 

himself  think  that  he  has  done  so.  It  still  remains 
lamentably  true  that  a  great  deal  of  reasoning 
even  on  practical  problems  is  an  effort  to  apply 
theories  without  any  adequate  understanding 
of  the  extent  to  which  the  theories  grow  out  of 
abstractions  made  for  purposes  of  study,  or  any 
effort  to  put  back  the  concrete  facts  from  which 
the  abstraction  was  made.  The  practical  busi- 
ness man  knows  how  these  various  forces  operate 
on  values.  He  studies  them,  tries  to  estimate 
their  force  in  quantitative  price  terms,  and  ad- 
justs his  plans  to  them.  If  a  religious  wave  sweeps 
over  a  large  section  of  the  country,  the  whole- 
saler sends  in  larger  orders  for  Bibles,  and  smaller 
orders  for  playing  cards.  If  a  rate-reduction  agi- 
tation is  going  on,  the  manufacturer  of  steel 
rails  and  railroad  supplies  plans  to  cut  down  his 
output.  If  trades-unionism  grows  strong,  em- 
ployers of  labor  recognize  that  they  must  read- 
just their  budgets. 


CHAPTER  XVIII 

THE  THEORY  OF  VALUE  AND  THE  THEORY  OP  PRICES 

(concluded) 

MY  strictures  upon  the  Austrian,  or  "utility" 
theory  of  value  in  what  has  gone  before  seem  to 
call  for  further  qualification  here.  As  a  theory 
of  value.,  as  a  theory  to  explain  the  nature  and 
origin  of  value,  I  am  convinced  that  the  Austrian 
theory  is  utterly  and  hopelessly  inadequate.  And 
yet,  for  the  work  of  the  Austrian  economists, 
taken  by  and  large,  I  have  the  highest  admira- 
tion. Their  treatment  of  margins,  their  concep- 
tion of  the  motivating  function  of  value,  and 
their  new  stress  on  the  demand  side  of  the  price- 
problem,  constitute  a  marked  advance  over  the 
point  of  view  of  the  earlier  English  School,  even 
though  perhaps  too  extreme  a  reaction.  And 
their  detailed  work  in  the  price  analysis,  despite 
the  utterly  inadequate  basis  which  the  utility 
theory  of  value  affords  for  it,  has  been  marvel- 
ously  accurate,  sound,  and  useful.  Having  no 
logical  warrant  for  an  objectively  valid  quan- 
titative value  concept,  they  have  none  the  less 
assumed  and  used  one  —  and  used  it  marvel- 
ously  well.  Sometimes  that  objective  value  is 
called  by  the  name,  "objective  value."  Some- 
times they  call  it  "marginal  utility,"  and  yet  it  is 
clearly  anything  but  the  feeling  of  an  individual, 


THEORY  OF  VALUE  AND  OF  PRICES         189 

for  it  is  broken  up  into  different  parts,  and  re- 
flected back  and  back  through  different  pro- 
ductive goods  of  remoter  and  remoter  rank  till 
it  has  got  very  far  from  the  individual  who  may 
be  supposed  to  feel  it.  Production  is  the  pro- 
duction, not  of  material  things,  but  of  "utili- 
ties" —  and  yet  these  utilities,  as  treated  in  the 
analysis,  are  anything  but  individual  feeling- 
magnitudes,  and  the  actual  reasoning  on  the 
basis  of  them  would  not  be  different  if  they  were 
called  quantities  of  value  outright.  By  logical 
leaps,  by  confusing  "utility"  with  demand,  or 
by  confusing  "marginal  utility"  with  objective 
value,1  the  Austrians  have  got  what  the  practical 
exigencies  of  price  theory  demand.  A  detailed 
estimate  of  the  work  of  the  Austrian  School  is, 
of  course,  out  of  place  here,  but  I  do  not  wish 
to  be  understood  as  failing  to  recognize  the  im- 
mense value  of  the  work  of  men  who  have  given 
so  great  an  impetus  to  economic  thought  as  has 
been  the  case  with  the  Austrian  masters. 

There  is  a  further  topic  in  connection  with  the 
relation  between  value  theory  and  price  theory 
that  calls  for  more  explicit  attention  here,  though 
frequent  reference  has  been  made  to  it  already. 
What  is  the  relation  of  the  distributive  problem 
to  value  theory  and  to  price  theory?  Is  distri- 
bution a  price  problem  or  a  value  problem? 

It  may  be  looked  at  from  either  angle,  and 
treated  in  either  way.  A  complete  theory  of 
distribution  involves  many  of  the  most  funda- 
mental social  values.  Indeed,  it  is  through  the 

1  Vide  supra,  chaps,  v  and  xi. 


190  SOCIAL  VALUE 

machinery  of  distribution  that  the  non-econo- 
mic values  most  vitally  affect  economic  values. 
Wages,  interest,  competitive  profits,  are  surely 
legal  categories,  and  are  possible  only  in  a  so- 
ciety where  there  is  free  labor  and  private  con- 
trol of  industry.  We  may  agree  with  Wieser  l 
that,  as  categories  of  economic  causation,  in- 
terest, rent,  and  wages  will  remain  even  in  a  com- 
munistic society  (and,  doubtless,  also  profit  and 
loss),  but  that  is  far  from  saying  (as  Wieser  of 
course  recognizes)  that  they  would  remain  as 
distributive  shares.  Each  social  system  has  its 
own  distributive  scheme. 

But,  in  a  system  like  that  of  Western  civili- 
zation to-day,  where  human  services  and  the 
uses  of  land  and  instrumental  goods  are  offered 
in  the  market  like  other  commodities,  we  may 
treat  them  in  terms  of  the  price  analysis  with  as 
much  propriety  as  the  other  commodities.  The 
prices  paid  for  them  measure  a  complex  of  so- 
cial forces,  but  we  cannot  always  disentangle 
these  social  forces  and  measure  them  separately. 
It  is  hard  to  tell  precisely  how  much  influence 
on  the  price  of  labor  has  been  exerted  by  a 
speech  from  Mr.  Gompers,  or  a  Federal  injunc- 
tion, or  a  law  for  the  exclusion  of  certain  classes 
of  immigrants.  If  we  wish  to  handle  distribu- 
tion quantitatively,  we  must  do  it  superficially, 
studying  in  the  market  the  effects  which  the 
underlying  social  forces  manifest  there  with  re- 
ference to  the  rewards  of  the  different  factors  of 
production.  This  has  been  increasingly  the  case 

1  Natural  Value,  passim. 


THEORY  OF  VALUE  AND  OF  PRICES         191 

with  later  theories  of  distribution.  If,  on  the 
other  hand,  we  take  the  discussion  which  J.  S. 
Mill  gives  in  book  n  of  his  Principles,  we  shall 
find  that  the  price  analysis  plays  relatively  little 
part,  and  that  he  considers  chiefly  the  influence 
of  the  more  fundamental  social  values.1 

A  failure  to  recognize  the  distinction  between 
value  theory  and  price  theory  seems  to  lie  behind 
the  complaint  which  Professor  Davenport  makes 
against  the  "Social  Value  School"  in  his  criti- 
cism of  Professor  Seligman:  "As  soon  as  we  turn 
from  the  value  problem  to  the  separate  treat- 
ment of  the  distributive  shares,  we  find  our- 
selves to  have  descended  from  the  cloud-land 
mysteries  of  transcendental  economics  to  the 
old  and  beaten  paths  of  the  traditional  analy- 
sis." 2  To  this  complaint  the  obvious  answer 
is  that  we  have  turned  from  fundamental  value 
theory  to  abstract,  quantitative  price  analysis. 
And  the  social  value  theorist  has  as  much  right 
to  do  this  as  has  any  other  economist  —  in  fact, 
if  our  theory  be  true,  only  on  the  basis  of  a  social 
value  doctrine  has  any  economist  a  right  (logi- 
cally) to  take  up  price  analysis. 

1  Mill's  self-congratulation  on  having  written  two  books  of  his  treatise 
without  taking  up  the  theory  of  value  has  been  commented  on  by  many 
economists.  He  was  able  to  do  this,  because  value  theory  meant  price 
theory  for  him.  Value  theory  in  the  sense  of  the  theory  of  the  forces  of 
social  control  and  motivation  does  appear  in  plenty  in  Mill's  first  two 
books,  and  also  the  wealth  concept,  which  he  connects  with  the  idea  of 
value,  and  a  quantitative  value  concept,  not  formally  denned,  but 
probably  all  the  more  useful  on  that  account.  It  was  a  sound  instinct 
that  led  Mill  to  take  up  the  problem  of  distribution  before  taking  up  the 
problem  of  "value."  Really,  in  discussing  distribution  as  he  did,  he 
was  making  a  very  real  contribution  to  the  ultimate  value j>roblem. 

*_,  Value  and  Distribution,  p.  451. 


192  SOCIAL  VALUE 

The  theory  of  value,  as  I  conceive  it,  is,  then, 
not  a  substitute  for  detailed  price  analysis,  but 
rather  a  presupposition  of  it.  The  theory  of  value 
is  to  interpret,  validate,  and  guide  the  theory 
of  prices.  If  the  theory  here  outlined  be  true, 
it  will  have  significant  consequences  for  the 
theory  of  prices,  in  that  it  will  open  up  new  pro- 
blems for  the  price  analysis  to  attack.  There  are 
many  social  forces  which  can  be  measured  with 
substantial  accuracy,  and  many  more  which 
can  be,  for  purposes  of  theory,  disentangled  from 
the  complex  in  which  they  appear,  and  treated 
by  the  methods  of  price  analysis  already  dis- 
cussed, which  economic  theory  has  not  yet  thought 
it  worth  while  to  attack.  The  economist  must 
emulate  the  practical  business  man,  in  trying 
to  treat  in  price  terms  the  various  social  changes 
which  affect  economic  values.  There  is  much 
left  for  the  theory  of  prices  to  do.  The  theory 
defended  here,  with  its  sharp  sundering  of  values 
and  prices,  will,  of  course,  criticize  the  mixing 
of  the  two.  One  chief  criticism  of  the  Austrian 
theory,  and  also  of  the  theory  of  the  English 
School  in  so  far  as  it  attempts  to  give  a  "real 
cost"  doctrine,  is  that  they  are  attempts  to  give 
both  a  theory  of  value  and  a  theory  of  prices  at 
the  same  time.  Certainly  we  must  object  to 
Bohm-Bawerk's  contention  that  the  solving  of 
the  price  problem  ipso  facto  solves  the  value 
problem.1  The  purpose  of  this  book  is,  not  de- 
structive, but  reconstructive.  A  detailed  criticism 
of  the  various  economic  theories  that  have  ap- 

i  Vide  supra,  chap.  iv. 


THEORY  OF  VALUE  AND  OF  PRICES         193 

peared,  as  theories  of  prices,  is  manifestly  too  big 
a  task  to  be  undertaken  here.  All  of  them  can- 
not, of  course,  be  accepted  in  toto,  for  there  are, 
doubtless,  irreconcilable  differences  among  them 
at  points.  But  it  is  the  belief  of  the  writer  that 
the  great  bulk  of  what  has  been  done  in  the  study 
of  the  quasi-mathematical  laws  of  prices  is  of 
substantial  worth,  that  a  recognition  of  the  dis- 
tinction between  value  theory  and  price  theory, 
and  of  the  confusions  that  result  from  mixing 
the  two,  will  remove  many  seemingly  irrecon- 
cilable differences  between  opposing  schools,  and 
that  existing  price  theories  are  less  to  be  criti- 
cized for  what  they  affirm  than  for  what  they 
ignore  and  deny. 

Much  of  the  significance  of  the  theory  of  value 
for  the  interpretation  of  price  theory  has  been 
indicated  from  time  to  time,  in  what  has  gone 
before.  Prices  have  meanings.  They  express 
values.  To  understand  the  meanings  of  prices, 
we  must  know  what  the  values  mean.  There 
is  one  further  point  in  this  connection  which  is 
so  important  that  we  shall  give  a  separate  chap- 
ter to  it. 


CHAPTER  XIX 

THE  THEORY  OP  VALUE  AND  THE  SOCIAL  OUTLOOK. 
SUMMARY 

THE  belief  that  social  optimism  and  social  pes- 
simism are  in  an  essential  way  linked  with  the 
theory  of  value  is  one  that  finds  expression  in 
a  good  many  writers.  The  socialist  theory  of 
value  is  supposed  to  serve  as  a  condemnation 
of  the  existing  social  regime;  Professor  Clark's 
system  of  value  and  distribution  is  often  in- 
terpreted as  justifying  an  optimistic  outlook. 
This  view  is  expressed  by  Professor  Frank  Fetter, 
for  one,  who  especially  stresses  this  aspect  of 
value  theory.1  Professor  Joseph  Schumpeter, 
in  his  article  on  social  value  several  times  men- 
tioned,2 indicates  that  an  optimistic  social  out- 
look is  a  necessary  corollary  of  the  theory  of 
social  value.  Wieser's  objection  to  the  doctrine 
that  economic  value  signifies  social  importance3 
seems  to  be  based  on  the  belief  that  the  doctrine 
means,  not  merely  that  society  is  responsible  for 
the  existing  value  situation,  but  also  that  that 
situation  is  consequently  a  just  and  righteous 
one.  And  the  same  notion  seems  to  be,  in  part 

1  Principles  of  Economics,  New  York,  1905,  pp.  415  et  seq. 
*  "On  the  Concept  of  Social  Value,"  Quar.  Jour.  Econ.,  1909,  pp. 
222-523. 
1  Nat.  Vol.,  p.  52,  n.  Quoted  supra,  chap.  i. 


THEORY  OF  VALUE  — SOCIAL  OUTLOOK       195 

at  least,  the  inspiration  of  Professor  Davenport's 
attack  in  his  recent  article  in  the  Quarterly 
Journal.1 

1  " Social  Productivity  vs.  Private  Acquisition,"  Quar  Jour.  Econ.,  Nov., 
1910,  pp.  112-13.  "  Economic  productivity  is  not  a  matter  of  piety  or  merit 
or  deserving,  but  only  of  commanding  a  price.  Actors,  teachers,  preachers, 
lawyers,  prostitutes,  all  do  things  that  men  are  content  to  pay  for.  So 
wages  may  be  earned  by  inditing  libels  against  a  rival  candidate,  or  by 
setting  fire  to  a  competitor's  refinery,  or  by  sinking  spices.  The  test  of 
economic  activity  in  a  competitive  society  is  the  fact  of  private  gain, 
irrespective  of  any  ethical  criteria,  and  unconcerned  with  any  social 
accountancy.  ...  If  whiskey  is  wealth,  distilleries  are  capital  items. 
If  Peruna  is  wealth,  the  kettle  in  which  it  is  brewed  must  be  accepted  as 
capital.  Then  so  is  the  house  rented  as  a  dive;  and  if  the  house  is  productive, 
and  is  therefore  capital,  so,  also,  must  the  inmates  be  producers  according 
to  their  kind.  The  test  of  social  welfare  is  invalid  to  stamp  as  unproduc- 
tive any  form  of  wealth,  or  any  kind  of  labor.  If  jimmies  are  capital, 
being  productive  for  their  purpose,  so  also  is  burglary  productive;  if 
sandbags,  so  highway  robbery.  .  .  .  Always  and  everywhere,  in  the  com- 
petitive regime,  the  test  of  productivity  is  competitive  gain." 

If  only  my  conception  of  social  value  is  granted,  I  may  safely  enough 
concede  Professor  Davenport  all  the  depravity  he  can  find  in  society,  and 
recognize  that  that  depravity  has  its  part  in  the  determination  of  the 
concrete  values.  Only,  I  would  insist,  virtue  as  well  as  depravity  is  a  fac- 
tor in  the  social  will,  and  plays  its  r61e  in  determining  economic  values, 
and  motivating  economic  activities.  Legal  values  are  not  "absolute" 
values,  in  the  sense  that  everybody  obeys  the  law,  but  laws  as  well  as 
lawlessness  affect  economic  values. 

It  may  be  well  at  this  point  for  me  to  make  clear  my  relation  to  Profes- 
sor Davenport.  Throughout  this  book,  his  theories  have  been  subject  to 
frequent  criticism.  The  obvious  reason  is,  of  course,  that  he  has  made 
himself  the  leading  critic  of  the  social  value  concept,  and  hence,  if  that 
concept  is  to  be  defended,  his  point  of  view  must  be  met.  But,  if  that 
were  all,  he  would  have  occupied  far  less  of  our  space  than  has  been  the 
case.  The  fact  is,  in  my  judgment,  that  Professor  Davenport  is  one  of  the 
commanding  figures  in  economic  theory.  I  think  no  economist  has  even 
approximated  the  clearness  and  explicitness  with  which  he  has  set  forth 
the  presuppositions  of  the  view  which  this  book  opposes,  and  that  no 
economist  has  ever  reasoned  more  clearly  upon  the  basis  of  these  pre- 
suppositions. Professor  Davenport  thus  presents  the  very  best  object  of 
attack,  if  one  is  to  justify  the  social  viewpoint  in  economic  theory.  My 
indebtedness  to  him  is  marked,  and  I  have  tried  to  indicate  the  fact  from 
time  to  time  in  notes.  His  book  has  aided  me  greatly  in  clarifying  my  own 
ideas,  and  has  also  substantially  abridged  my  bibliographical  labors. 
With  many  of  his  criticisms  of  existing  value  theory,  those  criticisms, 
especially,  which  are  concerned  with  the  internal  logical  contradictions 


196  SOCIAL  VALUE 

It  is  not  necessary  to  discuss  here  the  question 
as  to  whether  Professor  Clark  means  that  his 
theory  should  be  so  interpreted.1  What  I  wish  to 
insist  upon  is  that  no  implication,  either  opti- 
mistic or  pessimistic,  as  to  the  existing  social 
order,  can  be  drawn  from  the  theory  defended 
in  this  book.  Whether  or  not  economic  values 
in  particular  cases  correspond  with  ethical 
values,  whether  or  not  goods  are  ranked  on 
the  basis  of  their  import  for  the  ultimate  wel- 
fare of  society,  and  the  extent  to  which  this  is 
the  case,  will  depend  on  the  extent  to  which  the 
ethical  forces  in  society  prevail  over  the  anti- 
ethical  forces.  The  theory  as  such  is  neutral. 
Assume  our  existing  society,  modified  in  the  one 
particular  that  competition  shall  henceforth  be 
perfectly  free,  and  still  the  conclusion  does  not 
follow.  Idle  sons  of  our  multimillionaires  may 
inherit  ill-gotten  wealth,  may  invest  it  and  draw 
an  endless  income  from  it.  With  this  income  to 
back  their  desires,  they  may  make  the  services  of 
panders  worth  more  than  the  services  of  states- 
men and  inventors.  The  values  of  goods  depend 
on  the  more  fundamental  values  of  men,  even 
though  the  values  of  men,  under  abstract  eco- 

of  existing  value  theory,  I  am  in  hearty  accord.  The  chief  difference  be- 
tween us  at  this  point  will  be,  I  think,  that  I  try  to  go  further  than  he 
has  gone.  And  the  fundamental  differences  between  his  view  and  mine 
grow  out  of  the  different  psychological,  philosophical,  and  sociological  pre- 
suppositions with  which  we  start.  I  feel  that  the  individualistic  method 
of  approaching  the  value  problem  is  foredoomed,  provided  it  be  logically 
carried  out,  and  I  think  Professor  Davenport  has  logically  carried  it  out! 
1  I  regret  exceedingly  that  Professor  Clark's  absence  from  Columbia 
University  during  the  academic  year,  1910-11,  has  prevented  my  discuss- 
ing this,  and  a  host  of  other  questions  raised  in  this  book,  with  him. 


THEORY  OF  VALUE  — SOCIAL  OUTLOOK      197 

nomic  laws,  depend  upon  the  value  productivity 
of  their  labor  or  their  possessions.  The  theory 
is  a  theory  of  economic  value,  even  though  the 
tremendous  influence  of  ethical  and  other  values 
be  recognized  as  entering  into  economic  values. 
They  may  be  overpowered  by  opposing  forces. 
The  theory  is  a  general  theory,  and  holds  for  a 
decadent  as  well  as  for  an  improving  society; 
for  a  society  where  justice  reigns,  if  such  a  so- 
ciety there  be,  and  for  a  society  where  corruption 
is  rampant,  and  wolves  prey.  The  justification 
of  the  existing  social  order  is  to  be  sought  else- 
where —  the  theory  of  economic  value,  as  such, 
does  not  contain  it. 

The  main  steps  of  our  argument  may  be  briefly 
recapitulated  here:  Value  is  a  quantity,  socially 
valid;  value  is  not  logically  dependent  upon  ex- 
change, but  is  logically  antecedent  to  exchange; 
a  circle  in  reasoning  is  involved  if  the  relative 
conception  of  value  be  treated  as  ultimate;  the 
Austrian  theory,  and  the  cost  theory,  and  com- 
binations of  the  two,  all  fail  alike  to  lead  us  to  an 
ultimate  quantity  of  value;  they  fall  into  another 
circle,  that  of  explaining  value  in  terms  of  value, 
if  they  attempt  to  do  so;  the  defect  is  in  the  highly 
abstract  nature  of  the  determinants  of  value 
which  these  theories  start  from;  they  abstract 
the  individual  mind  from  its  connection  with 
the  social  whole,  and  then  abstract  from  the  in- 
dividual mind  only  those  emotions  which  are 
directly  concerned  with  the  consumption  and 
production  of  economic  goods;  this  abstraction 


198  SOCIAL  VALUE 

is  necessitated  by  the  individualistic,  subjectiv-i 
istic  conception  of  society,  which,  growing  out 
of  the  skeptical  philosophy  of  Hume,  has  domi- 
nated economic  theory  ever  since;  present  day 
sociology  has  rejected  this  conception  of  society, 
and  has  reestablished  the  organic  conception  of 
society  in  psychological  (rather  than  biological) 
terms,  which  make  it  possible  to  treat  society 
as  a  whole  as  the  source  of  the  values  of  goods; 
this  does  not  obviate  the  necessity  for  close  analy- 
sis, nor  does  it,  in  itself,  solve  the  problem,  but 
it  does  give  us  an  adequate  point  of  view;  the 
determinants  of  value  include  not  only  the  highly 
abstract  factors  which  the  value  theories  here 
criticized  have  undertaken  to  handle  arithmeti- 
cally, but  also  all  the  other  volitional  factors  in 
the  intermental  life  of  men  in  society  —  not  an 
arithmetical  synthesis  of  elements,  but  an  or- 
ganic whole;  legal  and  ethical  values  are  especially 
to  be  taken  into  account  in  a  theory  of  economic 
value,  particularly  those  most  immediately  con- 
cerned with  distribution;  the  theory  of  value 
and  the  theory  of  prices  are  to  be  sharply  dis- 
tinguished. 

The  function  of  economic  values  is  the  motiva- 
tion of  the  economic  activities  of  society.  Value 
as  treated  by  the  cost  theories,  or  value  as  a 
sum  of  money  costs,  is  a  blind  thing,  a  product 
rather  than  an  end,  and  fails  utterly  as  a  guid- 
ing, motivating  principle  for  economic  activity. 
It  is  the  merit  of  the  Austrian  School  to  have 
pointed  this  out.  But  the  abstract  individual 
factors  which  the  Austrians  have  substituted 


THEORY  OF  VALUE  — SOCIAL  OUTLOOK      199 

are  just  as  helpless  in  explaining  the  motivation 
of  social  activity.  Every  man's  course  is  made 
for  him  far  more  by  outside  forces  than  by  his 
own  individual  motives.  Economic  activity  in 
society  is  an  intricate,  complex  thing,  for  the 
motivation  of  which  no  individual's  motives 
can  suffice.  If  motivated  at  all  its  guidance 
comes  from  something  superindividual,  and  that 
something  is  social  value.  Ends,  aims,  purposes, 
desires,  of  many  men,  mutually  interacting  and 
mutually  determining  each  other,  modifying, 
stimulating,  creating  each  other,  take  tangible, 
determinate  shape,  as  economic  values,  and  the 
technique  of  the  social  economic  organization 
responds  and  carries  them  out. 


THE  END 


INDEX   OF   NAMES 


INDEX  OF  NAMES 


Adams,  T.  S.,  120,  n. 

Anaximander,  60. 

Anaximenes,  60. 

Aristotle,  61,  101. 

Austrian  School,  7,  8,  16,  n.,  17,  28, 

29,  SO,  31,  38,  n.,  39,  40,  41,  chap. 
VI,  49,  108,   113,  119,  121,  125, 
126, 152,  n.,  188-89, 192, 197, 198. 

Baldwin,  M.,  15,  n.,  56,  69,  n.,  73, 
74,  n.,  75,  80,  84,  95,  n.,  167. 

Berkeley,  G.,  62. 

Bohm-Bawerk,  E.  von,  7,  29,  31,  n., 
37-39,  40,  44,  n.,  49,  n.,  121,  152, 
n.,  192. 

Bradley,  P.  H.,  65,  n. 

Buckle,  H.  T.,  153. 

Bullock,  C.  J.,  4. 

Cairnes,  J.  E.,'65,  n.,  177. 

Carey,  H.  C.,  73. 

Carver,  T.  N.,  16,  27,  n. 

Clark,  J.  B.,  3,  4,  5,  6,  7,  8,  13,  16, 

30,  n.,  31-33,  39,  chap,  vn,  65, 

139,  n.,  143-44,  152,  n.  156,  165, 
173,  174,  194,  196. 

Clow,  F.  R.,  20,  n. 
Commons,  J.  R.,  157,  n. 
Comte,  A.,  73. 
Conrad,  J.,  15,  n.,  127,  n. 
Cooley,  C.  H.,  56,  69,  n.,  77  et  seq., 
84,  157. 

Darwin,  Charles,  63. 

Davenport,  H.  J.,  6,  21,  22,  n.,  23, 
27,  n.,  37, 41, 42,  66, 71,  n.,  87-89, 
98,  113,  n.,  121,  n.,  122,  133,  n., 

140,  n.,  142,  n.,  175,  n.,  182,  191, 
194,  195,  n. 

DeGreef,  G.,  72-76. 
DesCartes,  Rene",  62,  63,  81. 


Dewey,  J.,  65,  n.,  68,  n.,  84,  n.,  95, 

n.,  96,  n.,  100,  168,  n. 
Draper,  J.  W.,  72. 
Durkheim,  E.,  117,  n. 

Edgeworth,  F.  Y.,  25. 

Ehrenfels,  C.,  94,  98,  106,  n.,  108, 

n.,  110,  n.,  Ill,  n. 
Elwood,    C.  A.,    56,  n.,    76,    n., 

84,  n. 

Ely,  R.  T.,  17,  n.,  42,  118,  n. 
English  School,  17,  38,  n.,  47,  121, 

164,  165,  166,  188,  192. 

Fetter,  F.,  194. 

Fisher,  I.,  17,  26,  n.,  43,  n. 

Flux,  A.  W.,  42,  120,  n. 

George,  Henry,  16. 
Giddings,  F.  H.,  75,  n.,  82,  83. 
Goethe,  J.  W.  von,  70. 
Gompers,  S.,  190. 

Hadley,  A.  T.,  15,  42. 
Hayden,  E.  A.,  56,  n. 
Hayes,  E.  C.,  155,  n. 
Hegel,  G.  W.  F.,  63. 
Hermann,  F.  B.  W.  von.,  38,  n. 
Hesiod,  73. 
Hobson,  J.  A.,  47,  49. 
Hume,  David,  62,  63, 198. 

Ingram,  J.  K.,  3,  n. 

James,  Wm.,  65,  n.,  68,  n.,  184,  n. 
Jevons,  W.  S.,  4, 7, 25,  28,  29,  31,  n., 
34-36, 39, 40, 41, 42, 65, 73, 176,  n. 
Johnson,  A.  S.,  140,  n. 

Kallen,  H.  M.,  94,  n. 
Kant,  Immanuel,  25,  63,  67. 


204 


INDEX  OF  NAMES 


King.  Gregory,  169. 
Kinley,  D..  4. 5,  27,  n.,  120,  n. 
Kreibig.  J.  C.,  94,  n. 

Laughlin,  J.  L.,  20,  n.,  26,  27,  n., 

49,  n. 

Law,  John,  171. 
Lilienfeld,  P.  von,  74. 
Lloyd,  W.  F.,  176,  n. 
Locke,  John,  62. 

Mackenzie,  J.  S.,  Ill,  n. 

Malthus,  T.  R.,  139. 

Marshall,  A.,  41,  42,  49,  65, 140,  n., 

177,  182,  185,  n. 

Marx,  Karl,  3,  n.,  15, 16,  26, 153. 
Meinong,  A.,  94.  95,  n.,  98,  n.,  99, 

102,  111,  n. 

Merriam,  L.  S.,  4,  5,  27,  n. 
Mill,  James,  63,  n. 
Mill,  J.  S.,  37,  63,  n.,  74,  n.,  138, 

143,  172,  177,  191. 
Montague,  W.  P.,  94,  n. 

Novikow,  J.,  74. 

Pantaleoni,  M.,  19,  n. 

Pareto,  V.,  3,  n.,  20,  n.,  25,  31.  n., 

34,  36-37.  39,  40,  n.,  45,  n.,  65, 

154,  n. 

Patten,  S.  N.,  42,  175. 
Paulsen,  Friedrich,  69,  n.,  85,  n.,  95, 

n.,  97,  n. 

Perry,  R.  B.,  70,  n. 
Pierson,  N.  G.,  41. 
Plato.  61,  184. 

Ricardo,  David,  53,  n.,  175,  176. 

Rodbertus,  J.  K.,  3,  n.,  8, 9. 

Ross,  E.  A.,  4,  5,  117,  n.,  148,  n., 

173. 

Rousseau,  J.  J.,  63. 
Royce,  J.,  117,  n. 

Santayana,  G.,  96. 
Sax,  E.,  8. 


Schaeffle.  A.,  42.  120. 
Schiller,  F.  C.  S..  68,  n. 
Schumpeter.  J.,  6, 140.  n.,  175, 181, 

194. 

Scott,  W.  A.,  120,  n.,  180,  n. 
Seligman,  E.  R.  A.,  4,  5,  6,  n.,  13, 

16,  19,  20,  n.,  26,  32,  n.,  87,  145, 

153,  chap,  xvi,   176,  n.,  177,  n., 

191. 

Senior,  N.  W.,  26. 
Shaw,  C.  C.,  95,  n. 
Simiand,  F.,  74. 

Simmel,  G.,  19,  n.,  20,  n.,  94,  n.,  95. 
Skelton,  O.  D.,  15,  n. 
Slater,  T.,  95,  n. 
Small,  A.  W.,  63,  n. 
Smith,  Adam,  63,  176. 
Socrates,  61. 
Sophists,  60. 

Spencer,  Herbert,  72,  83. 
Spinoza,  Benedict  de,  62,  63. 
Stuart,  H.  W.,  68,  n.,  95,  n.,  168,  n. 

Tarde,  G.,  4, 16,"56,  95,  97,  n.,  103, 
118,  n.,  chap,  xn,  148,  n.,  172, 
179. 

Taylor,  W.G.L.,  16,  n.,  23. 

Thackeray,  W.  M.,  66. 

Thales,  60. 

Tufts,  J.  H.,  95,  n. 

Tuttle,  C.  A.,  4. 

Urban,  W.  M.,  70,  n.,  95,  97,  n.,  98, 
n.,  99, 101,  n.,  103, 108,  n.,  110,  n., 
116.  chap,  xii,  167,  n. 

Veblen,  T.,  30,  n.,  65. 

Wagner,  Adolph,  3,  n.,  9. 

Walker,  F.  A.,  25,  26,  137. 

Wicksteed,  P.  H.,  Ill,  n.,  113,  n. 

Wieser,  F.  von,  8, 16,  17,  18,  28,  29. 
81,  n.,  34,  35,  40,  46,  47,  49,  n., 
120,  n.,  132,  133,  136,  137,  143, 
190,  194. 

Wundt,  W.,  85,  n. 


CAMBRIDGE  .  MASSACHUSETTS 
U  .  S   .  A 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


A     000  689  429     9 


